Base Knowledge
Knowledge of Mathematics at the 9th grade level, as well as logarithms and exponential function.
Teaching Methodologies
Theoretical/Practical classes. The expositive method is used and classes are suported in a wide range of practical cases.
Learning Results
Goals:
The main goal of this course is to provide the basic concepts in Finance, particularly those related with the value of money in time.
Skills:
At the end of the course, students must be able to:
– apply the calculation methods inherent to asset and liability financial transactions;
– discuss and compare the various financing modalities available to private and public entities;
– identify the determining factors of the financial cost inherent in the different types of financing;
– produce and interpret maps and other documents relating to the various financing modalities.
Program
Chapter I – Capitalization and discount
1 – Return, financial transactions and interest rate
2 – Capitalization
2.1 – Simple interest
2.2 – Compound interest
2.3 – Continuous interest
3 – Calculation of interest in banking practice
4 – Confrontation between the various capitalization regimes
5 – Discount operations
5.1 – Discount at simple interest
5.2 – Discount at compound interest
Chapter II – Interest rates
1 – Kinds of interest rates
2 – Proportional and equivalent interest rate
3 – Nominal and effective interest rates
4 – Average interest rate
5 – The effect of taxation: gross and net interest rate
6 – Annual percentual rate of charge (APR)
Chapter III – Short-term Financing Sources
1 – Discount of credit securities
1.1 – Concept and characteristics of bills
1.2 – Bills’ discount
1.3 – Concept and characteristics of promissory notes
2 – Effective cost of discount
3 – Bills’ roll-over
Chapter IV – Equivalence of capital
1 – Equations of value
2 – Evaluation rate
Chapter V – Annuities
1 – Main concepts
2 – Kinds of annuities
3 – Two main cases
3.1 – Discounted value of an annuity
3.2 – Accumulated value of an annuity
4 – Annuities due
5 – Deferred annuities
6 – Fractional annuities
7 – Perpetual annuities of constant terms
8 – Contingent annuities: their specificities
Chapter VI – Long-term Financing Sources
1 – Loans
1.1 – Notion and characteristics of loans
1.2 – Amortization of loans
1.3 – Amortization schedules
1.4 – Periodic instalments and periodic repayments
2 – Debentures: their specificities
Curricular Unit Teachers
Internship(s)
NAO
Bibliography
Main references:
1) Quelhas, A. P. & Correia, F. (2017). Manual de Matemática Financeira, Coimbra: Almedina (4th edition reimpressa).
2) Matias, R. (2018). Cálculo Financeiro – Teoria e Prática, Escolar Editora (6th edition).
3) Matias, F., Martins, A., Monteiro, C. & Correia, T. (2020). Matemática Financeira – Teoria e Prática. Lisboa: Edições Sílabo.
4) Alves, C., Ribeiro, C., Farinha, J. & Alves, R. (2019). Cálculo Financeiro Aplicado. Coimbra: Almedina (2nd edition).
5) Santos, L. F. & Laureano,R. (2011). Fundamentos do Cálculo Financeiro. Lisboa: Edições Sílabo.
Additional references:
Quelhas, A. P. (2019). Mathematics of Finance. Almedina (e-book ).