Introduction to Financial Maths

In addition to your class tuition and study materials, you will receive the following:


Case Study

• Constructing a simple price weighted index (e.g. DJIA), market value weighted index (e.g. FTSE Series) & geometric index (The Ordinary Share Index)

Exercises

• Calculating the standard deviation, sample standard deviation and a variance of a data series of equity prices
• Calculations to familiarise delegates with, present and future values and their application towards financial instruments and corporate financial decision-making
• Calculating probabilities using the standard normal probability distribution

Other Extras

• Certificate of attendance

Level: Introductory


Synopsis:
We all need to understand the fundamentals of financial mathematics and it is not nearly as bad as you think.... we promise! You'll feel a whole lot better once you've attended the course. On completion, you will have gained the necessary skills required to price and analyse almost any financial instrument as well as obtaining an understanding of how stock market indicators are produced and how risk and return are measured.


At the end of the course participants will be able to: Explain and calculate yield measures and discount rates . Explain and calculate the internal rate of return . Consider how DCF techniques are applied to financial product analysis . Know the differences between discrete and continuous compounding techniques . Compute and understand the concept of the time value of money . Know how the major financial market indices of the world are calculated . Compute and interpret movements in financial market indices . Explain the application to the measurement of risk . Compute and interpret measures of central tendency and dispersion . Explain the sources of data and how data is collected and presented .


Prerequisites:
None


Suitable For:
Individuals new to the financial services industry, this course forms the basis of any future knowledge of how financial products are priced.


Collecting data

• Sources of data
• Types of data
• Populations vs. sample selection
• Presenting data in visual form

Descriptive statistics

• Measures of central tendency and dispersion
• The relationship between mean, medium and mode
• Simple mean vs. geometric mean
• Standard deviation as a measure of risk

Index numbers

• Constructing and interpreting index numbers
• Constructing financial market indices (including re-basing)
• Bond market indices
• Major economic indices

Financial mathematics

• Present values - discounting / compounding
• Discrete vs. continuous compounding
• Annuities and mortgages
• Perpetuities
• Net present value calculations
• Internal rate of return
• Bond equivalent yield vs. equivalent annual yield
• Converting discount rates to yield measures

Concepts of probability

• Categories of probability
• Event diagrams and total probability rules
• Expected value and probability distribution
• Joint probability functions
• Common probability distributions

Application of financial maths in the real world

• Applying DCF (discounted cash flow) techniques to the pricing of bonds and equities
• Measuring the risk of financial instruments: Beta, duration