Simon Fraser University
Engaging the World

Course Outlines

Spring 2021 - ACMA 210 D100

Mathematics of Compound Interest (3)

Class Number: 3398

Delivery Method: In Person

Overview

  • Course Times + Location:

    Jan 11 – Apr 16, 2021: Mon, 10:30 a.m.–12:20 p.m.
    Burnaby

    Jan 11 – Apr 16, 2021: Wed, 10:30–11:20 a.m.
    Burnaby

  • Exam Times + Location:

    Apr 17, 2021
    Sat, 3:30–6:30 p.m.
    Burnaby

  • Prerequisites:

    MATH 152; or MATH 155 or MATH 158 with a grade of at least B.

Description

CALENDAR DESCRIPTION:

Measurement of interest, present value. Equations of value. Basic annuities: immediate, due, perpetuity. General annuities. Yield rates: cash flow analysis, reinvestment rate, portfolio and investment year methods. Amortization schedules and sinking funds. Bonds and other securities. Inflation, yield curves, immunization. Applications: real estate mortgages, depreciation methods. Interest rate disclosure and regulation in Canada. Covers the interest theory portion of Exam FM of the Society of Actuaries. Quantitative.

COURSE DETAILS:


Course Outline:

This course is an introduction to the mathematics of compound interest. The topics covered correspond to the course of reading of Exam FM of the Society of Actuaries and they include:

  • Measurement of Interest: Simple interest, compound interest, accumulation functions, present value, effective and nominal rates, forces of interest. 
  • Equations of value: Basic problem, numerical results, unknown time, unknown rate of interest. 
  • Basic Annuities: Immediate, due, perpetuities. 
  • General Annuities: Payments at a different frequency than interest is convertible, continuous annuities, varying annuities.
  • Yield Rates: Cash flow analysis, reinvestment rate.
  • Amortization Schedules and Sinking Funds: Outstanding loan balance, varying series of payments, continuous payments.
  • Bonds and Other Securities: Types of securities, price of a bond, premium and discount, yield rates, callable bonds, serial bonds. 
  • Applications: Real estate mortgages, interest rate disclosure and regulation. 
  • Other: Inflation, yield curves, forward rates, spot rates, duration, convexity, immunization, interest rate swaps.

Mode of Teaching

  • Lecture: Synchronous (not recorded)
  • Tutorial: Synchronous
  • Quizzes and Midterm: Synchronous; Date: TBA
  • Final exam: Synchronous; date: TBA
Remote invigilation (Zoom, or other approved software) will be used.

This course is accredited under the Canadian Institute of Actuaries (CIA) University Accreditation Program (UAP). Achievement of the minimum required grades in accredited courses may provide credit for preliminary exams. Please note that a combination of courses may be required to achieve exam credit. Details on the required courses and grades for the Simon Fraser University can be found here.

In addition to the specific university’s internal policies on conduct, including academic misconduct, candidates pursuing credits for writing professional examinations shall also be subject to the Code of Conduct and Ethics for Candidates in the CIA Education System and the associated Policy on Conduct and Ethics for Candidates in the CIA Education System. For more information, please visit information for candidates on obtaining UAP credits.

Grading

  • Quizzes 15%
  • Midterm 1 25%
  • Midterm 2 25%
  • Final Exam 35%

NOTES:

Above grading is subject to change.

Materials

MATERIALS + SUPPLIES:

Access to high-speed internet, webcam.

REQUIRED READING:

Required Text:

Mathematics of Investment and Credit (7th ed.) by Samuel A. Broverman. Publisher: ACTEX
or
Mathematics of Investment and Credit (6th ed.) by Samuel A. Broverman. Publisher: ACTEX

*Note: Problem sets will be assigned based on end-of-chapter exercises in the 7th edition, which may differ from the 6th edtition.

Required SOA Study Notes:

Using Duration and Convexity to Approximate Change in Present Value by R. Alps, SOA, FM-24-17.

Interest Rate Swaps by J. Beckley, SOA, FM-25-17.

Determinants of Interest Rates by M. A. Bean, SOA, FM-26-17.


RECOMMENDED READING:

Mathematics of Compound Interest by M.V. Butcher & C.J. Nesbitt, pub: Ulrich's

The Theory of Interest (2nd ed.) by S.G. Kellison, Publisher: Richard D. Irwin Inc.

Financial Mathematics – A Practical Guide for Actuaries and other Business Professionals (2nd ed.) by Ruckman and Francis, pub: BPP Professional Education

Department Undergraduate Notes:

Students with Disabilities:
Students requiring accommodations as a result of disability must contact the Centre for Accessible Learning 778-782-3112 or csdo@sfu.ca


Tutor Requests:
Students looking for a Tutor should visit http://www.stat.sfu.ca/teaching/need-a-tutor-.html. We accept no responsibility for the consequences of any actions taken related to tutors.

Registrar Notes:

ACADEMIC INTEGRITY: YOUR WORK, YOUR SUCCESS

SFU’s Academic Integrity web site http://www.sfu.ca/students/academicintegrity.html is filled with information on what is meant by academic dishonesty, where you can find resources to help with your studies and the consequences of cheating.  Check out the site for more information and videos that help explain the issues in plain English.

Each student is responsible for his or her conduct as it affects the University community.  Academic dishonesty, in whatever form, is ultimately destructive of the values of the University. Furthermore, it is unfair and discouraging to the majority of students who pursue their studies honestly. Scholarly integrity is required of all members of the University. http://www.sfu.ca/policies/gazette/student/s10-01.html

TEACHING AT SFU IN SPRING 2021

Teaching at SFU in spring 2021 will be conducted primarily through remote methods. There will be in-person course components in a few exceptional cases where this is fundamental to the educational goals of the course. Such course components will be clearly identified at registration, as will course components that will be “live” (synchronous) vs. at your own pace (asynchronous). Enrollment acknowledges that remote study may entail different modes of learning, interaction with your instructor, and ways of getting feedback on your work than may be the case for in-person classes. To ensure you can access all course materials, we recommend you have access to a computer with a microphone and camera, and the internet. In some cases your instructor may use Zoom or other means requiring a camera and microphone to invigilate exams. If proctoring software will be used, this will be confirmed in the first week of class.

Students with hidden or visible disabilities who believe they may need class or exam accommodations, including in the current context of remote learning, are encouraged to register with the SFU Centre for Accessible Learning (caladmin@sfu.ca or 778-782-3112).