Financial Mathematics

The goal of the subject is for students to master the basic and derived models of investment and depreciation based on the complex gain considering the deterministic processes. Basic and derived models together with methods are inseparable part of every professional decision-making of business entities, and state and social institutions.

After passing the exam, students will be able to make independently, as part of team and interdisciplinary use models and methods of investment and depreciation in all processes based on an adequate gain and reduction.

Cost of capital and its effects in a complex capitalization; The principle of equivalence of deterministic processes; Financial and/or in-kind effects of capitalization of an amount; Financial and/or in-kind effects of capitalization of more of the same and/or variable amounts; Models of payment for recurring periodic payments - rents; Classical and combined models of repayment of loans; Conversion of loans and its effects; Classical and combined models of repayment of loans divided on the bonds; Models of negotiating and concluding loans – evaluation of loans. Algorithms of models and methods of the investment decision making.

Lectures, exercises and seminars.

Classical lectures and exercises. Case studies. Repetition exercises in small groups. Colloquium I (0-20 points); Colloquium II (0-20 points); Final exam (0-50 points); Attendance (2point); Class activities (seminar papers, discussions, case studies) (0-8 points)

Barnett, A. R.; Ziegler, R. M. (1996). College Mathematics for business, economics, life sciences and social sciences. London: Prentice Hall; Cissel, R.; Cissel H.; Flaspohler C. D. (1990). Mathematics of Finance. Boston: Houghton Mifflin Company; Jacques, I. (1999). Mathematics for Economics and Business. London: FT Prentice Hall; Krčmar, М. (2007). Financial Mathematics and Methods of Investment Decision Making. Sarajevo: Kemigrafika; Trklja, B. (2002). Financial Mathematics. Sarajevo: Faculty of Economics.