Basic Accounting Theories

Interest Rate Mathematics - Part 2

Overview

This tutorial describes the techniques of valuation of cash flows under the following situations.
‧ Cash flows occur at some point in the future which need to be evaluated today.
‧ Valuation of streams of future equal cash flows with end date, i.e. annuities
‧ Valuation of streams of future equal cash flows having no end date, i.e. perpetuities
The valuation of such cash flows is relevant to the valuation of various financial instruments and obligations, e.g. perpetual securities. This course further explores the application of these valuations methods in the investment decision making.

Objective

On completion of this tutorial, you will be able to:

-Recognize the relationship between the present value, future value, and the discount factor
-Calculate the future value of an investment for a given present value and a given interest rate
-Recognize the importance of annuities in finance and how they are valued
-Calculate the present value of a perpetuity

Content

Module 1: Present Value & Future Value

Topic 1: Present Value
Topic 2: Future Value

Module 2: Annuities & Perpetuities

Topic 1: Annuities
Topic 2: Perpetuities

Details

Code
TEBBA17000901
Venue
ePlatform
Relevant Subject
Type 1 - Dealing in securities
Type 2 - Dealing in futures contracts
Type 3 - Leveraged foreign exchange trading
Type 4 - Advising on securities
Type 5 - Advising on futures contracts
More
Language
English
Level
Introductory
Hours
SFC:1.50, PWMA:1.50
Fees
Chinese Securities Association of Hong Kong (HKCSA): HK$470
Staff of Corporate Member: HK$450
All Member: HK$450
Non-Member: HK$675