Financial Mathematics: Introduction, Topics, Examples & Course Outline

Continuing further from our previous article Financial Accounting, In this article, we will cover another well known and most sought after topic of Financial Mathematics. Money requires understanding, and that understanding can come only when you know maths quite well. Now the maths required for Finance is not algebra or trigonometry, but there is a seperate section called Financial Mathematics.
Here we cover some basic details about the Financial Mathematics course outline, what all is covered in Financial Mathematics and how useful is Financial Mathematics for survival in Financial World. Making correct calculations for profit / loss is as important as making the right investment decision. Moreover, with the introduction of complex financial products like derivatives, options, swaps, etc. it has become a necessity for not just the financial professionals and investors but even for the individuals to know and understand Financial Mathematics.
Even if you are not an investor or trader, chances are that you might have taken a loan or might be manageing a savings account. You need to understand the effective interest rate payments you make for your loan repayment or credit card and the effective interest you receive from your savings account.

The course on Financial Mathematics teaches you all these things. The course on Financial Mathematics includes the following:

Fundamentals of Financial Mathematics:

 -- Time Value of Money o Cash Flows and Discount Rates o Present Values o Future Values

 -- Investment Measures

 -- Returns: Calculation and Conventions

 -- Interest Rates, Yields and Rates of Return Compared

Fixed Income Analytics of Financial Mathematics:

 -- Price and Yield Calculations

 -- Yield Curves, Spot Rate Curves and Fixed Income Valuation

 -- Quantifying Interest Rate Risk


Equity Securities Analytics of Financial Mathematics:

 -- Pricing Models: Discounted Cash Flows, Earnings or Dividends

 -- Pricing Models: Earnings, Cash Flow, Sales or Book Value Multiples

 -- Capital Asset Pricing Model (CAPM)

 -- Beta and Systematic (Market) Risk

 -- Index Model and Equity Investment Selection

ALong with these topics and their theoretical knowledge, you may also be required to get a lesson in fundamental tools and applications like MS Excel, E-views, Matlab etc