This course gives participants the mathematical foundations on which to build their ability to price and model financial instruments.
It starts with the concept of the Time Value of Money (TVM) and looks at how different factors affect the results. Participants will be taught how to use of a financial calculator and practice calculations.
The course will also introduce the concept of the Internal Rate of Return (IRR).
Suitability
This course is for individuals new to the financial markets.
Learning Outcomes
At the end of this course delegates should understand:
- The time value of money and the internal rate of return
- The method of discounting and compounding
- How to calculate simple and compound interest, net present value and future value in Excel and using a Texas calculator
Course Content
Time Value of Money (TVM)
- Non-annual compounding
- Discounting
- Annuities and perpetuities
- Net Present Value (NPV)
- Financial functions in Excel
- Using the Texas calculator
Exercises: Calculating simple and compound interest, NPV, future value, required rate of return, discount rates and required yield in a range of scenarios
Internal Rate of Return (IRR)
- The ‘mining’ example
- Calculating IRR on Excel
- Problems with IRR
Exercises: Calculating IRR and NPV in more complex scenarios
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