Documente Academic
Documente Profesional
Documente Cultură
COURSE BASICS
Credit Hours 3
Lecture(s) Nbr of Lec(s) Per Week 2 Duration 1.25 hours
Recitation/Lab (per week) Nbr of Lec(s) Per Week Duration
Tutorial (per week) Nbr of Lec(s) Per Week Duration
COURSE DISTRIBUTION
Core No
Elective Yes
Open for Student Category Open for all
Close for Student Category None
COURSE DESCRIPTION
With the recent developments in Finance over the past decade, the usefulness of Mathematical tools in Finance has become
significant than ever. The course provides an introduction to mathematics of finance and is ideal for developing an understanding
and knowledge of basic mathematical finance that a student requires throughout his or her academic and professional career. It
introduces the vocabulary of mathematics of finance that helps developing the understanding of financial instrument at large. The
course serves as the basis for higher studies in finance, quantitative finance, computational finance, financial engineering, financial
economics, economics, insurance, actuarial sciences or any similar field. The course will broaden your horizon of finance and
financial industry. Not only that the course is essential for the undergraduate and graduate studies in finance but also plays an
important role in the student’s performance in their professional careers.
The course covers topics including basics of calculus, time value of money, theory of interest, probability, normal random variables
and probability, arbitrage theorem, random walks and Brownian motion.
COURSE PREREQUISITE(S)
Principles of Finance
Calculus I
LEARNING OUTCOMES
Upon completion of the course, students will be able to;
Indicate below how the course learning objectives specifically relate to any program learning goals and
objectives.
PROGRAM LEARNING GOALS AND COURSE LEARNING OBJECTIVES COURSE ASSESSMENT ITEM
OBJECTIVES
Goal 1 –Effective Written and Oral The course provides an opportunity to Written: Assignments, Quizzes
Communication students to write and deliver effectively Oral: CP
the mathematical nature problems arising
in Finance.
Goal 2 –Ethical Understanding and
Reasoning
Goal 3 – Analytical Thinking and Problem The course equips students with basic Assignments, Quizzes, Exams
Solving Skills problem solving techniques in Finance
using quantitative methods. It enables
students to analytically think a problem
and solve it using the problem solving
techniques they're learning throughout
the course
Goal 4 – Application of Information Students will simulate stock prices using Class work and Assignments
Technology Excel
Goal 5 – Teamwork in Diverse and The course forces students to learn in Assignments and Projects
Multicultural Environments teamwork. The discussion on assignments
and lecture notes will help them in
working in diverse environments
Goal 6 – Understanding Organizational NA
Ecosystems
Goal 7 (a) – Discipline Specific Knowledge Students will learn quantitative skills in Quizzes, Assignments, Project, and
and Understanding finance that they can apply and model the Exams
real world financial situations/problems
Goal 7 (b) – Understanding the “science” This is a basic course in mathematics of
behind the decision-making process finance. Students will learn tools that may Assignments, Quizzes, and Exams
help them in future if they opt for
Quantitative finance career in designing
and solving a problem in finance using
quantitative skills.
Assignments: 15% There will be around 4-5 assignments during the semester. Students are advised to submit the assignments
before the deadline. Late submissions will not be entertained. No make-up assignments will be given! There will be one excel based
assignment for module 4 of the course.
Quizzes: 20% There will be around 4-6 announced & unannounced quizzes in class. The N-1 policy will be applicable only when the
number of quizzes exceeds 4. No make-up quizzes will be conducted.
Lahore University of Management Sciences
Please note that no late submission for assignments or project will be entertained. Missed deadlines mark zero for the instrument. Please also
note that there is no make-up quizzes or assignments in case of absence (even if it is approved by OSA). There is no grade for attendance,
however being absent from class will reflect in reduced CP and other instrument grades.
Class Participation: 5%
Class rules:
You are advised to be on time in sessions. There will be no class participation for students arriving late in the session. There is zero-
minute tolerance policy for late arrivals.
Use of mobile phones, bringing food, or creating disturbance in the class will mark you absent for the session.
In case of any absences, even if approved from OSA, the CP for the session will be zero.
Students are required to bring calculator and basic stationary in the sessions for class works.
Students are advised not to miss a lecture session for topics taught in the sessions are interlinked and missing a session means less to no
learning in the following sessions (or in the course).
The exams are closed book/closed notes. Cheat sheets are not allowed! No re-take or compensations (mean) of exams will be allowed
unless approved by OSA and instructor beforehand for university competitions or otherwise.
EXAMINATION DETAIL
Yes/No: YES
Combine Separate:
Midterm
Duration: 1 hour 15 minutes
Exam
Preferred Date:
Exam Specifications:
Yes/No: YES
Combine Separate:
Final Exam Duration: 2 hours
Exam Specifications:
Lahore University of Management Sciences
COURSE OVERVIEW
Lahore University of Management Sciences
The course outlines are subject to change
WEEK/
RECOMMENDED
LECTURE/ TOPICS SESSION OBJECTIVE(S)
READINGS
MODULE
Basics of Calculus
The module is based on the revision of the basic mathematics and calculus concepts that students have already learnt in Further
mathematics or Calculus I. The module prepares students to look at finance from mathematical side. The module reviews the real
number system, vectors and array, polynomial and series concepts along with functions, their derivatives and integration.
Finance
The module is based on the basic concepts in finance and interest rate theory. The students learn the core concepts in finance such
as time value of money and rate of return. They will learn the mathematics behind the interest rate compounding and measuring
the rates in discrete and continuous times.
Probability Theory
Randomness is a core concept in finance, especially when we model the financial securities and instruments. It provides the
analytical tools to solve practical problems in the complex and rapidly evolving world of today's financial industry. Due to the
Lahore University of Management Sciences
randomness involved in the financial industry, we work in a probabilistic way. The module provides the essential concepts that are
required for defining and understanding the modeling of a Brownian motion.
28 Moved in Module 1
TEXTBOOK(S)/SUPPLEMENTARY READINGS
Lahore University of Management Sciences
1. J Robert Buchanan. An Undergraduate Introduction to Financial Mathematics, World Scientific Publishing Company, 3rd
Edition, [ISBN 9789814407441] (Finance and Randomness)
2. Kevin J. Hastings. Introduction to Financial Mathematics, Chapman and Hall, 2015. [ISBN 9781498723909] (Finance and
Randomness)
3. Geoffrey R Grimmett and David R Stirzekar, Probability and Random Processes, Oxford University Press, 3 rd Edition, 2001.
[ISBN-13: 978-0198572220] (Probability Theory)
4. George B Thomas, Maurice D Weir, Joel Hass and Franke R Giordano, Thomas’ Calculus, 11 th Edition, Addison Wesley,
2004. [ISBN 9780321185587] (Calculus review)
5. Dennis G Zill and Micheal R Cullen, Differential Equations with Boundary Conditions, 7th Edition, Cengage Learning, 2009.
[ASIN: B008UB1WJE] (Introduction to Differential Equations Overview)