MATHEMATICS FOR ECONOMICS AND FINANCE -1

This course belongs to the characteristics teaching activities of the bachelor course "Commercio Estero e Turismo". In line with the educational objectives of the course, this activity aims to present mathematical, financial and computational tools that allow studying decision problems that arise in domestic and international financial markets.

1. Knowledge and understanding skills.
Attendance and active participation in lectures, online activities, exercise sessions, and tutoring activities, together with individual study, will allow the student to acquire the following knowledge and understanding skills:
- acquire the basic vocabulary needed to engage with theoretical and practical problems related to the valuation of debts and financial investments,
- describe the characteristics and the properties of financial instruments (loans, mortgages, annuities, sovereign and corporate bonds, forward and futures) and their markets;
- understand the risk profiles of financial operations with particular reference to bonds and financial operations involving foreign currencies;
- understand the basic references on using derivatives contracts as hedging instruments.

2. Ability to apply knowledge and understanding.
Through the interaction with the instructors, the tutors, and peers and through the individual study the student acquires the following abilities:
- identify the relevant elements in a financial problem with particular attention to the risk profiles;
- collect and organize data necessary to carry out a financial analysis of the problem
- compare models and financial instruments discussed in the course;
- solve valuation problems.

3. Judgment skills, communication skills, learning skills.
Regarding the autonomy of judgment, communication skills and learning abilities, through the personal and group study of the concepts seen in class, the student will be able:
- with reference to a specific financial problem, to discuss the suitability of a financial instruments, to choose the most convenient alternative, and to choose the appropriate valuation method.
- to formulate rational justifications to the approach used to solve financial problems, understanding their relative strengths and weaknesses, by means of hypotheses, data and models;
- to know how to formulate and communicate an adequate analysis and interpretation of a financial operation/instrument also through the use of mathematical models.

See: http://www.unive.it/pag/32221/

1. Elements of financial mathematics with emphasis on a cash flow approach: time value of money, present value, future value. Financial regimes: simple interest, compound interest, discount. Equivalent rates, inflation.
2. Foreign currencies and exchange rates. Exchange rate risk and its effects on profitability of financial operations.
3. Annuities, Sinking funds, Mortgages.
4. Fixed income securities, valuation of bonds, and elements of the term structure of interest rates.
5. Duration and elements of bond portfolio immunization.
6. Elementi introduttivi su derivati finanziari.

- A. Basso, P. Pianca, Introduzione alla Matematica Finanziaria (III edizione), Wolters Kluwer, 2017
- M. Corazza, L'n-esimo eserciziario di Matematica Finanziaria, Giappichelli, 2017
- Further material made available on-line on the course website in moodle.unive.it

Evaluation is based on a final written exam based on 3 exercises.

The exam is closed-book, and no notes are allowed. A list with max 15 formulas is allowed.

The entire course covers 30 academic hours of teaching. There are also 10 extra hours of exercise sessions and dedicated tutorship activities.

Registration to Moodle platform is mandatory. In case of problems, the student can get in contact with the instructor by mail (d.barro@unive.it).

written

This subject deals with topics related to the macro-area "Human capital, health, education" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development