| Teaching
Philosophy |
'Whatever be the detail with which you cram your students, the
chance of them meeting in after-life exactly that detail is
almost infinitesimal; and if they do meet it they will probably
have forgotten what you taught them about it. The really useful
training yields a comprehension of a few general principles
with a thorough grounding in the way they apply to a variety
of concrete details. In subsequent practice, the students will
have forgotten your particular detail, but they will remember
by an unconscious common sense how to apply principles to immediate
circumstances." |
| Alfred
N. Whitehead: The Aims of Education & other Essays. |
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Introduction |
Candidates should have a practical knowledge of the theory of
interest in both finite and continuous time. That knowledge
should include how these concepts are used in the various annuity
functions, and apply the concepts of the present and accumulated
value for various streams of cash flows as a basis for future
use in : reserving, valuation, pricing, duration, asset/liability
management, investment income, capital budgeting, and contingencies. |
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Course
Objectives |
Candidates
should understand the following principles and applications
of interest theory:
- Accumulation
function and special cases of simple and compound interest.
- Nominal
and effective interest and discount rates, and the force
of interes
- constant and varying.
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Valuation of discrete and continuous stream of payments,
including the case in which the interest conversion period
differs from the payment period.
- Determination
of yield rates on investments, both portfolio and investment
year methods, and the time required to accumulate a given
amount or repay a given loan amount.
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Applications of interest theory to amortization of lump
sums, fixed income securities, depreciation, mortgages,
etc.
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Candidates should be able to perform present and accumulated
value calculations using non-level interest rates.
Candidates should be able to use annuity functions in a broad
finance context.
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Course
Material, References |
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The Theory
of Interest, Stephen G. Kellison
Theory of Interest and Life Contingencies, with Pension Applications:
A Problem-Solving Approach, Michael M. Parmenter
Candidates are encouraged to access the free download: BPP
course 2 Part 1
http://www.bpptraining.com/
http://bpptraining.com/Docs/c2%20part1%20fall2004.pdf
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Lecture
Notes & Handouts |
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Problem
Papers |
- Problem Paper #1
(doc, pdf)
- Problem Paper #2
(doc, pdf)
- Problem Paper #3
(doc, pdf)
- Problem Paper #4
(doc, pdf)
- Problem
Paper #5 (doc,
pdf)
- Problem
Paper #6 (doc,
pdf)
- Problem
Paper #7 (doc,
pdf)
- Problem
Paper #8 (doc,
pdf)
- Problem
Paper #9 (doc,
pdf)
- Problem
Paper #10 (doc,
pdf)
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Practice
Papers & Review Exercises |
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Past
Exam Papers |
- Final
Exam December 2004 (doc,
pdf)
- Incourse
Test - November 2004 (doc,
pdf)
- Incourse
Test - October 2005 (doc,
pdf)
- Incourse
Test Solutions - October 2005 (doc,
pdf)
- Incourse
Test - October 2006 (doc,pdf)
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Notices |
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Accuracy
is important. So is the demonstration of understanding. |
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