Simon Fraser University
Engaging the World

Course Outlines

Spring 2026 - RISK 201 D100

Interest Theory and Applications (3)

Class Number: 6194

Delivery Method: In Person

Overview

  • Course Times + Location:

    Jan 5 – Apr 10, 2026: Mon, 10:30 a.m.–12:20 p.m.
    Burnaby

    Jan 5 – Apr 10, 2026: Wed, 10:30–11:20 a.m.
    Burnaby

  • Instructor:

    Sessional

  • Prerequisites:

    MATH 152 with a minimum grade of C; or MATH 155 or MATH 158, with a grade of at least B. Recommended: RISK (or ACMA) 101 or RISK 102.

Description

CALENDAR DESCRIPTION:

Measurement of interest, present value. Equations of value. Annuities. Loans and amortization schedules. Bonds and other securities. Cash flows: yield rates, duration, convexity, immunization. Yield curves: spot rates, forward rates. Interest rate swaps. Students with credit for ACMA 201 or ACMA 210 may not take this course for further credit. Quantitative.

COURSE DETAILS:


Course Outline:

This course is an introduction to financial mathematics. The material covered is useful for everyday applications involving sequences of predetermined (non-contingent) payments, such as loans, mortgages, annuities and fixed income investments. It is also fundamental to working with more complex, contingent cash flows in actuarial practice (pricing, reserving, asset-liability management and capital budgeting). Topics include:

  • Measurement of Interest: Simple interest, compound interest, accumulation functions, present value, effective and nominal rates, force of interest, inflation, real rates, determinants of interest rates.
  • Equations of value: Basic problem, 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, rates of return.
  • Amortization Schedules: Principal and interest payments, 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. 
  • Other: Yield curves, forward rates, spot rates, duration, convexity, immunization, interest rate swaps.

This course is part of the University Accreditation Program and meets specific requirements set by the Canadian Institute of Actuaries (CIA). Please consult the CIA website for full details on CIA accreditation.
 

Grading

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

NOTES:

Above grading is subject to change.

Materials

RECOMMENDED READING:

Interest Theory: Financial Mathematics and Deterministic Valuation, 2nd ed. Authors: Francis, J. and Ruckman, C., Publisher: ActuarialBrew (2018)

Mathematics of Investment and Credit (8th ed.) by Samuel A. Broverman. Publisher: ACTEX

Mathematics of Finance, Authors: Brown, R. and Kopp, S., Publisher: McGraw-Hill Ryerson (2021)
Book is available through the SFU Bookstore
ISBN: 9781260326932

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.


REQUIRED READING NOTES:

Your personalized Course Material list, including digital and physical textbooks, are available through the SFU Bookstore website by simply entering your Computing ID at: shop.sfu.ca/course-materials/my-personalized-course-materials.

Registrar Notes:

ACADEMIC INTEGRITY: YOUR WORK, YOUR SUCCESS

At SFU, you are expected to act honestly and responsibly in all your academic work. Cheating, plagiarism, or any other form of academic dishonesty harms your own learning, undermines the efforts of your classmates who pursue their studies honestly, and goes against the core values of the university.

To learn more about the academic disciplinary process and relevant academic supports, visit: 


RELIGIOUS ACCOMMODATION

Students with a faith background who may need accommodations during the term are encouraged to assess their needs as soon as possible and review the Multifaith religious accommodations website. The page outlines ways they begin working toward an accommodation and ensure solutions can be reached in a timely fashion.