FINANCIAL MATHEMATICS - PRACTICE

The module tackles the subjects and problems of the classical Financial Mathematics and aims at providing theoretical notions and operational capacities that enable to solve the main financial problems in conditions of certainty that arise in business and financial markets.

1. Theoretical knowledge: by the end of the course, students will be able
to:
- acquire the basic vocabulary needed to allow students to engage with theoretical and practical problems related to the valuation of
debts and financial investments,
- understand essential literature on debts and financial investments instruments and their markets,
- define the fundamental features of debts and investments (loans, mortgages, leasing, coupons and zero-coupon bonds),
- appreciate the importance of assessing risks and costs inherent with financial investments and debts.

2. Theoretical, applied, and methodological skills and competences: by
the end of the course, students will be able to:
- identify the relevant aspects of a problem or specific risk to hedge,
- organize and integrate data and information needed to find a solution,
- compare models and financial tools discussed during the course,
- solve evaluation problems.

3. Judgment and decision-making skills: by the end of the course, students are expected to be able to:
- choose the most convenient alternative,
- apply the method which is more aligned to the problem under study.

4. Communication skills:
- present in writing analyses and results of practical and theoretical problems and solution to exercises,
- use the students' forum (on moodle.unive.it) to discuss further problems and exercises.

5. Learning capability: the student is expected to:
- study the book indicated in the references and possibly to read the assigned chapters before classes,
- take notes,
- solve further exercises available online and at the end of the book.

Mandatory priority exam: see https://www.unive.it/web/en/4624/exams

There will be exercises on the following topics.
1. Interest rates
2. Interest rates in the presence of inflation or for a financial transaction in a foreign currency
3. Annuities
4. Amortization of a debt
5. Bonds
6. Criteria for the evaluation of fixed financial projects
7. Introduction to Forwards, Futures and Options.

A. BASSO, P. PIANCA, Introduzione alla Matematica Finanziaria (3rd ed.), Wolters Kluwer, 2017

M. CORAZZA, L'n-esimo eserciziario di Matematica Finanziaria, Giappichelli, 2017

Further readings and exercises are available on-line at moodle.unive.it

A written examination. The exam will propose a series of theoretical questions and exercises aimed at verifying the skills described above.
Optional Homework (group work): max 4 points

Standard theoretical lectures, exercises on the arguments carried out, tutoring.

Italian

Further readings can be found on the e-learning platform Moodle.
The moodle page also reports the precise list of examinable material.

written