AS/AK/ MATH 2580
6.0

Mathematics of
Investment and Actuarial Science

Theory of interest; annuities certain; amortization and sinking funds; evaluation of bonds
and other investments; depreciation, depletion and capital cost; insurance, including
mortality tables, principles of life annuities, premiums and reserves.
The first fourfifths of the course deal with most of the
above topics, with applications to simple and general annuities, perpetuities, loan
payments, capital budgeting, and internal rates of return. In the last few weeks of the
course, the theory of interest is applied to life annuities and life insurance.
Students will use EXCEL, a spreadsheet available in the
microcomputer laboratory in the Steacie building. This spreadsheet operates on both the
Macintosh and IBMcompatible platforms. EXCEL will be used to simplify and illuminate
equationsolving, amortization of loans and mortgages, bond schedules, depreciation
tables, and mortality tables. No previous computer experience is assumed. With the
help of notes and class instruction students will be introduced to the spreadsheet and to
its use in mathematics of finance. Students will receive individual computer accounts on
the ACADLABS server. Each student will also need a handheld calculator which has power
and logarithm functions. Specifically, it must be able, given values of x
and y, to compute x^{y}.
The course should be especially interesting to students of
business and economics. The emphasis will be on practical problems. Although the
mathematical background required is minimal, it is preferred that students will have taken
one other mathematics course at university before taking this one.
The required text for the course will be P. Zima and R.
Brown, Mathematics of Finance (4th Ed.), McGrawHill Ryerson Ltd. 1993. The manuals
for EXCEL will be on reserve at the desk in Steacie Library.
Students who wish a more advanced treatment of the material
should not take this course, but enrol instead in MATH2280 3.0. In particular, this
includes:
 Honours Mathematics for Commerce students in the Actuarial Stream. MATH2280 3.0 is a
required course for this programme.
 students who are contemplating a career in the actuarial profession. They should take
MATH 2280 3.0, followed by MATH 3280 6.0.
In past years the final grade has been based on class
testing (60%) and a final examination (40%). There will likely be some spreadsheetbased
homework assignments.
Prerequisite:One full university mathematics course.
Exclusions:AS/MATH 1581 3.0, AS/SC/MATH 2280 3.0, AS/MATH 2581 3.0.
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