| CODE | SOR1450 | ||||||||||||
| TITLE | Principles of Financial Mathematics and Life Policies | ||||||||||||
| UM LEVEL | 01 - Year 1 in Modular Undergraduate Course | ||||||||||||
| MQF LEVEL | 5 | ||||||||||||
| ECTS CREDITS | 4 | ||||||||||||
| DEPARTMENT | Statistics and Operations Research | ||||||||||||
| DESCRIPTION | This study-unit combines topics in financial and actuarial mathematics and uses statistics, mathematics and financial theory to study uncertain future events, particularly those related to financial investments, insurance and pension programs. This study-unit is essential to those who wish to further their knowledge in financial risk management. The following are the topics that will be covered: - Calculation of Interest rates - Term Structure of Interest rates - Nominal and Effective Rate - Present Values, Accumulations and Annuities - The Loan Schedule for a Level Annuity - Interest and Annuities payable p-thly and continuously - Survival Analysis - Insurance Premiums - Insurance Benefit Payments Contingent on Death - Life Annuities Contingent on Survival - Balances and reserves of life policies - Life policies in p-thly and continuous time Study-unit Aims: - Cover classical theory of compound interest and provide a solid grounding in mathematical techniques related to financial concepts, including Term Structures of interest rates, Present Values, Accumulations and Annuities. - Introduce survival analysis, which will be the probability component used in life insurance. - Apply the mathematical finance framework together with the uncertainty provided by survival analysis to life insurance policies: specifically life annuities (e.g. pensions), life insurance, and a combination of the two. Learning Outcomes: 1. Knowledge & Understanding: By the end of the study-unit the student will: - Be able to obtain a solid grounding on financial concepts, including term structures of interest rates, present values, accumulations and annuities; - Have the necessary background from survival analysis needed in life policies; - Be able to generalise financial concepts to the life policy framework; - Be able to demonstrate knowledge on necessary concepts regarding premiums and utility theory which will also be covered within the needed context. 2. Skills: By the end of the study-unit the student will be able to: - Use the principles and techniques described in the study unit to work out problems related to finance; - Apply the financial concepts learnt, together with survival analysis, to life policies; - Use software tools to reach the above aims. Main Text/s and any supplementary readings: McCutcheon, J.J. and Scott, W.F. (1986). An Introduction to the Mathematics of Finance. Umi-Pub. Bowers, N.L., Gerber, H.U., Hickman, J.C., Jones, D.A., and Nesbitt, C.J. (1997). Actuarial Mathematics. Society of Actuaries. Promislow, S.D. (2011). Fundamentals of Actuarial Mathematics (Second Edition). Wiley. |
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| ADDITIONAL NOTES | Pre-requisite Qualifications: Advanced Level Pure Mathematics | ||||||||||||
| STUDY-UNIT TYPE | Lecture, Independent Study & Tutorial | ||||||||||||
| METHOD OF ASSESSMENT |
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| LECTURER/S | Liberato Camilleri David Paul Suda |
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The University makes every effort to ensure that the published Courses Plans, Programmes of Study and Study-Unit information are complete and up-to-date at the time of publication. The University reserves the right to make changes in case errors are detected after publication.
The availability of optional units may be subject to timetabling constraints. Units not attracting a sufficient number of registrations may be withdrawn without notice. It should be noted that all the information in the description above applies to study-units available during the academic year 2025/6. It may be subject to change in subsequent years. |
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