This page aims to yield an overview of the characteristics of basic financial instruments, how they are priced in markets and how return is measured and compared across different types of instruments.
This section reviews the basics of financial mathematics and discuss the set of principles and formulas that allow us to compare investment alternatives and compute the prices and yields of financial instruments.
It is important to note that the topics covered in this module are fundamental to understand the rest of the course. You will understand that money has different values over time, and that the interest rate is actually the price of money over time.
We will also cover important concepts of financial mathematics, particularly the concept of net present value and the concept of the internal rate of return, which are both of them very useful to assess investment alternatives, and also to compare among investment alternatives.
Learn the essentials of Financial Mathematics through by clicking these articles:
- Time Value of Money
- Simple Interest
- Compound Interest
- Nominal and Effective Interest
- Intra-Year Compounding
- Net Present Value
- Future Value
- Internal Rate of Return
Pricing Money Market instruments
- Money Market and Instruments
- Fixed Income Securities
Topics to be added in the near future:
- Pricing Money Market instruments
- Bond pricing
- Sensitivity of Bond Prices