Define a given term
Determine an equation of value, given a valuation problem involving one or more sets of cash flows at specified times
Candidates will understand key procedures of the financial mathematics: determining equivalent measures of interest; discounting; accumulating; determining yield rates; estimating the rate of return on a fund; amortization
Specifically, candidates are expected to demonstrate the ability to:
Calculate the equivalent annual effective rate of interest, given a nominal annual rate and a frequency of interest conversion, discrete or continuous, other than annual.
Calculate the equivalent effective rate of interest per payment period given a payment period different from the interest conversion period.
Estimate the interest return on a fund
Calculate the loan amount or outstanding loan balance, given a set of loan payments (level or varying) and the desired yield rate (level or varying)
Calculate the value of a stock, given the pattern of dividends and the desired yield rate (level or varying)