***This is a course guideline.  Students should contact instructor for the updated information on current course syllabus, textbooks, and course content***

Prerequisites: MATH 2414

Textbook: (Recommended)  “The Theory of Interest" by Stephen G. Kellison, 3rd edition, McGraw-Hill 2009. ISBN: 9780883857540

Course Description: Bonds and bank certificates of deposit, arbitrage, bond and annuity valuation, total return, market risk, risk management, term structure construction, liability management.

*Note: Prospective students should also know about partial differentiation and be able to use a spreadsheet program such as Excel or Open Office. The course does not require, or use, any probability theory.

The aim of the course is to introduce students to the mathematics of simple financial calculations. This is a mathematical modeling course; we are interested in using elementary mathematics to determine costs, prices and returns in various standard “fixed income problems” including the basic analysis of loans, bonds and portfolios. 

Covered Topics

1. Formulae for simple and compound interest, determination of annual percentage rates (APR).
2. Formulae for loan amortization and payment schedules, determination of effective interest rates.
3. Present values and Discount rates.
4. Geometric series and simple difference equations.
5. Valuation of annuities.
6. Amortization of loans including mortgages and auto loans.
7. Pricing of treasury bills and bonds. Determination of current yield, duration and discount factors.
8. Analysis of leverage.
9. Elementary analysis of portfolios.

-- Syllabus by Giles Auchmuty -- 2012

Grading: Please consult your instructor's syllabus regarding any and all grading guidelines.

Justin Dart Jr. Center Accommodations:

Academic Adjustments/Auxiliary Aids: The University of Houston System complies with Section 504 of the Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990, pertaining to the provision of reasonable academic adjustments/auxiliary aids for students who have a disability. In accordance with Section 504 and ADA guidelines, University of Houston strives to provide reasonable academic adjustments/auxiliary aids to students who request and require them. If you believe that you have a disability requiring an academic adjustments/auxiliary aid, please visit Justin Dart Jr. Student Accessibility Center website at https://www.uh.edu/accessibility/ for more information.

UH CAPS

Counseling and Psychological Services (CAPS) can help students who are having difficulties managing stress, adjusting to college, or feeling sad and hopeless. You can reach (CAPS) by calling 713-743-5454 during and after business hours for routine appointments or if you or someone you know is in crisis. No appointment is necessary for the "Let's Talk" program, a drop-in consultation service at convenient locations and hours around campus.