FINANCIAL MATHEMATICS

Single discipline educational activity

Course Sheet

Course code:

00074L

Academic Year of enrolment:

2020

Year of supply:

2021/2022

Type of Course:

Characterising

Degree:

Course of 1st Cycle Degree in BUSINESS ADMINISTRATION

Disciplinary Sector:

MATHEMATICAL METHODS OF ECONOMICS, FINANCE AND ACTUARIAL SCIENCES

Location:

PESCARA

Credits:

Programme Year:

Professor and Collaborators:

MARI Carlo

Cycle:

First semester

Hours of classroom activity:

Individual study hours:

153

Prerequisites:

Basic notions of calculus and linear algebra. Basic notions of economics.

Objectives

GENERAL OBJECTIVE
The course is in line with the general objective of the course of study to provide economic skills and mathematical-statistical techniques for an adequate understanding of the economic system and the functioning of financial markets. The course, in particular, aims at equipping students with the mathematical tools necessary for understanding financial phenomena.

SPECIFIC OBJECTIVES
To learn the basic concepts and tools of modern finance;
To know how to formulate and solve basic problems of modern finance.

EXPECTED RESULTS OF LEARNING
The student is expected to assimilate the fundamental notions of understanding the functioning of financial markets and of analyzing economic and financial phenomena; to adequately know the main economic and financial phenomena; to be able to correctly set and solve basic problems of modern finance; to be able to communicate effectively on economic and financial issues, using an appropriate technical language.

KNOWLEDGE AND UNDERSTANDING ABILITY
The course provides students with the knowledge and analytical tools needed to understand the main economic and financial phenomena in the field of market finance and corporate finance.

ABILITY TO APPLY KNOWLEDGE AND UNDERSTANDING
The student must be able to interpret the main economic and financial phenomena. In particular he/she must be able to build models to formulate and solve basic problems of modern finance on all the topics included in the course program.

AUTONOMY OF JUDGMENT
The student must be able to independently assess the necessary information, to conduct surveys and to set up quantitative analysis of financial phenomena.

COMMUNICATION SKILLS
The student must be able to communicate effectively on economic and financial issues, using an appropriate technical language. The ability to communicate on a multidisciplinary level on economic-financial and mathematical-statistical topics is, in this respect, the main target of the course.

ABILITY TO LEARN
The student must acquire a significant analytical ability and a well-founded quantitative survey method to be able to deal with subsequent teachings.

Contents

The course is a basic course on the modern finance theory that provides the economic notions and quantitative analysis tools needed to interpret financial phenomena. The teacher will adopt a unified point of view to deal with specific topics of market finance and corporate finance, such as the evaluation of bonds, the evaluation of stocks, the evaluation of investment projects and firms, the capital structure.

Extended Syllabus

The time value of money.
Discounting.
The Internal Rate of Return (IRR).
The bond market.
Valuing bonds.
The term structure of interest rates.
Forward rates.
Interest rate risk.
Perpetuities and Annuities.
Amortizing loans.
The stock market.
Valuing stocks.
Valuing projects.
The Net Present Value (NPV) decision rule.
Capital structure in a perfect market.
The Modigliani-Miller theorem.
The equity cost of capital.
Market imperfections and capital structure.
The weighted average cost of capital (WACC).
The agency costs (and benefits) of leverage.

The course topics are covered in the following textbooks:
J. Berk - P. De Marzo, Finanza Aziendale vol.1, Pearson. Chapters: 3 - 4 - 5 - 6 - 7 (paragraphs: 7.1; 7.2) - 9 (paragraphs: 9.1; 9.2) - 14 - 15 (paragraphs: 15.1; 15.2; 15.3) - 16.
C. Mari, Appunti di Matematica Finanziaria (downloadable from the e-learning platform of the University).

Recommended Bibliography

J. Berk - P. De Marzo, Finanza Aziendale vol.1, Pearson.
C. Mari, Matematica per il management: gli strumenti finanziari (downloadable from the e-learning platform of the University).

Methods of Provision

Conventional

Teaching Methods

The course structure is the following one: 72 hours of frontal lessons. The lessons include the progressive construction of the theoretical reference system with applications and examples.

Evaluation methods

Verification of learning:

The assessment of learning will be carried out passing a written test which involves the resolution of numerical exercises on the topics of the course. Students will be asked to illustrate the procedures followed in solving the exercises. The oral exam is optional (the student can decide to take the oral exam), or in the event of having to acquire further elements of evaluation. Further details on how the tests will be conducted will be provided in the classroom.

Contacts/More Information

E-mail: carlo.mari@unich.it

Università degli Studi
"G. d'Annunzio"

Chieti - Pescara

Aree