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Course Objectives:
At the end of the course, the student is expected to know the basic concepts relating to the Theory of
Interest and apply them to solve real-world problems in finance, accounting, and business. In particular, the
student is expected to know the following:
Exams:
There will be 3 written Long Exams with a cumulative weight of 2/3 of the Final Grade. Aside from
this, a Final Exam will be given at the end of the semester and this will make up 1/3 of the Final Grade. The
passing grade at the end of the semester is 60%. Standard college rules will be used in determining the Final
Grade to be marked in the grading sheet.
COURSE OUTLINE
1 Self-Introduction by the teacher and the students, Wikipedia / other external Reading
discussion of class policies, Overview of the subject sources assignment
2 The Accumulation Function and the Amount Kellison ( Ch. 1.2 – 1.5 ) YES
Function, The Effective Rate of Interest, Simple
Interest and Compound Interest
3 Present Value, The Effective Rate of Discount, Kellison ( Ch. 1.6 – 1.8 ) YES
Nominal Rate of Interest and Discount convertible
mthly
4 Forces of Interest and Discount, Varying Interest Kellison ( Ch. 1.9 – 1.10 ) YES
5 Obtaining Numerical Results, Determining Time Kellison ( Ch. 2.2 – 2.5 ) YES
Periods, The Basic Problem, Equations of Value
6 Unknown Time, Unknown Rate of Interest, Practical Kellison ( Ch. 2.6 – 2.8 ) YES
Examples
7 Annuity-Immediate, Annuity-Due, Annuity Values Kellison ( Ch. 3.2 – 3.4 ) YES
on Any Date
8 Perpetuities Kellison ( Ch. 3.5 ) YES YES
9 Unknown Rate of Interest, Varying Rate of Interest Kellison ( Ch. 3.8 – 3.9 ) YES
10 EXERCISES YES
11 EXAM 1
12 Annuities payable at a different frequency than Kellison ( Ch.4.2 – 4.3 ) YES
interest is convertible, Analysis of Annuities payable
LESS frequently than interest is convertible
13 Analysis of Annuities payable MORE frequently Kellison ( Ch.4.4 ) YES
than interest is convertible
14 Continuous Annuities, Basic Varying Annuities Kellison ( Ch.4.5 – 4.6 ) YES
15 More General Varying Annuities Kellison ( Ch.4.7 ) YES
16 Continuous Varying Annuities Kellison ( Ch.4.8 ) YES
17 Discounted Cash Flow Analysis, Uniqueness of the Kellison ( Ch.5.2 – 5.3 ) YES
Yield Rate
18 Reinvestment Rates, Interest Measurement of a Fund Kellison ( Ch.5.4 – 5.5 ) YES
19 Time-Weighted Rates of Interest Kellison ( Ch.5.6 ) YES YES
20 EXERCISES YES
21 EXAM 2
Meeting No. Topic Reference/s Quiz Homework
CRITERIA