Objective: 

The aim of Fundamentals of Financial Arithmetic is to provide a grounding in financial arithmetic and its simple applications.

Acquired knowledge:
Students will have a knowledge about the present value and future value of deposits and annuities.
Students will know and understand different loan repayment methods.
Students will be familiar with the valuation of basic money and capital market instruments.

Acquired skills:
Students will be able to compute the present value and future value of deposits and annuities.
Students will be able to prepare and analyse different debt repayment plans.
Students will be able to articulate determinants of the valuation of basic financial instruments.

Developed reflection:
Students will be able to assess the benefits resulting from the choice of different methods of savings and ways to repay debts.
Students will be better able to understand the role of basic financial instruments in economy.

Assessment: 
The final grade consists of: term paper ( 50 % ), student own work ( 30% ), class activity ( 20% ).

Contents: 
1. Time value of money. Percentage change. Interest rate. Simple interest, compound interest, compounding frequency, compounding agreement, continuously compound interest, equation of value,  future value, present value, discount factor, effective rate, average interest rate.

2. Annuities. Present and future value of an annuity, annuity payment, annuity-immediate, annuity due, level payment annuity, non-level annuities, perpetuity.

3. Loans. Principal, interest, payment amount, payment period. Long-term loan repayment methods. Equal principal payments. Equal total payments. Other loan repayment methods.

4. Money market instruments: treasury bills and certificates of deposit. Pricing and quotation, rate of return, discount yield. Capital market instruments: treasury bonds and stocks.

Recommended reading: 
Introduction to financial mathematics, Kevin J. Hastings, CRC Press, 2015