Describe how to use a generalised cash flow model to represent financial transactions of simple financial instruments.

ACST2002 Mathematics of Finance

• Describe the aims and stages of data analysis and its desired reproducibility.
• Describe why and how models are used as well as the benefits and limitations of actuarial modelling.
• Describe how to use a generalised cash flow model to represent financial transactions of simple financial instruments.
• Define the accumulated amount under the operations of simple interest and compound interest.
• Define the effective rate of interest for a given period and derive the equivalent effective rate of interest for another period.
• Define the present value and future value of a sequence of cash flows using a compound interest model.
• Describe the relationship between rate of interest and rate of discount and also their conceptual differences.