MATH 490 - Spring 2013
Financial Mathematics
Instructor: Brian Estervig
Office: Carver 447
E-mail: estervig@iastate.edu
Webpage: www.public.iastate.edu/~estervig/
Class: MWF 2:10-3:00 in Carver 282
Office Hours: M 3:10-4:00
TR 11-11:50
W 1:10-2:00
or by appointment
Textbook: A Basic Course in the Theory of Interest and Derivatives Markets: A Preparation for the
Actuarial Exam FM/2 by Marcel B. Finan
The textbook is freely available online from the author’s website: http://faculty.atu.edu/mfinan/
actuarieshall/mainf.pdf
Calculators: Only certain calculators are allowed to be used on the actuarial exams administered by
the SOA/CAS. These are the only calculators you will be allowed to use on the exams in this course.
A link to a list of them is on the course webpage. You may use as many of them at a time as you want
(I personally prefer having two different kinds for different purposes). I recommend that you have a
Texas Instruments BA II plus and we will spend some time learning to use that calculator in class.
Course Webpage: www.public.iastate.edu/~estervig/Math490_S13
Check this page frequently. This is where announcements, reading assignments, homework assignments, and other important information will be posted. I will also post your grades and a few
non-public files on Blackboard.
Course Outline: This course will follow the topics covered on the SOA/CAS exam FM/2. The
goal of this course is for you to develop an understanding of the fundamental concepts of financial
mathematics and how those concepts are applied in calculating present and accumulated values for
various streams of cash flows. The course will also include an introduction to financial instruments,
including derivatives, and the concept of no-arbitrage as it relates to financial mathematics. We will
spend approximately 75% of the course on general interest theory and the remaining 25% studying
financial derivatives.
Clickers: I plan to use clickers to facilitate class participation and to get feedback about how the
class is going. I don’t plan on including them as part of the course grade unless it seems necessary to
motivate participation. If they are included then they will be a small part of the homework grade.
Reading Assignments This course will have to be fast paced in order to discuss as much of the
FM/2 exam syllabus as possible. Accordingly, you will be expected to read the assigned sections of
the book before coming to class and we may not discuss everything in those sections in class. The
reading assignments will be posted on the course website.
Homework: There will be regular homework assignments due approximately every other week. No
late work will be accepted. At the end of the semester the two lowest homework scores will be
dropped (i.e. not count towards your grade).
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Projects: One or two projects (possibly group projects) will be assigned in order to facilitate a deeper
understanding of certain topics. These will likely involve some basic work in Excel or other software.
Details will be announced as we discuss those topics.
Exams: The preliminary actuarial exams are each multiple choice exams with approximately 10 questions per hour. They are graded on a scale of 0-10 with 6 and above as a passing score. The percentage
that will get you a 6 grade varies by exam and administration, but it is usually somewhere between
55-70%. The exams in this course will be based on this format. For example, the in-class exams will
each have 10 multiple choice questions with 6 correct enough for an A. Thus the percentages given
will be 100% for 6-10 correct, 90% for 5, 80% for 4, 60% for 3, 40% for 2, and 20% for 1.
Exam
Exam
Exam
Schedule of Exams:
Exam
Exam
Final
1
2
3
4
5
Feb. 6
Feb. 27
Mar. 15
Apr. 3 Apr. 12
Apr. 19 Apr. 24
In Class
In Class
In Class
In Class
In Class
Place and Time TBA
Plan ahead to be at the exams! No make-up exam will be given without prior notification unless there
was a legitimate emergency. I am willing to move the exam days a little if there is a class consensus
however.
Assigning Course Grades: The scores from Homework, Projects, and Exams will be given the
following weights to determine your final grade:
Homework
Projects
In-Class Exams
Final Exam
25%
10%
40 %
25 %
Correspondence: The easiest way to get a hold of me is by e-mail (estervig@iastate.edu). Please
feel free to e-mail anytime. It will help me keep things straight if you write ”Math 490” in the subject
line.
Disability Accommodations Please address any special needs or special accommodations with me
at the beginning of the semester or as soon as you become aware of your needs. Those seeking accommodations based on disabilities should obtain a Student Academic Accommodation Request (SAAR)
form from the Student Disability Resource (SDR) office (phone 515-294-7220). SDR is located on the
main floor of the Student Services Building, Room 1076.
Changes to Syllabus: There may be minor changes to course policies during the semester. If there
are any changes they will be announced in class and on the course website.
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