Simple and compound interest; Time value of money with concepts of relationships between rates of
interest and discount over different time periods; Compound Interest functions; Generalised cash flow
modelling to describe financial transactions; Loans; Net present value (NPV), accumulated profit, and
internal rate of return (IRR) for investment projects; Investment project appraisal using NPV and IRR;
Measurement of investment performance; Ordinary shares; Yield curves and the term structure of
interest rates; Investment and risk characteristics of standard asset classes; Discounted mean term;
Simple stochastic interest rate models; Forward interest rates; Forward contracts; The concept of noarbitrage
pricing.
