Math 175: Syllabus, Structure, Details and Policies (Fall 2016)Introduction to Financial MathematicsThis course is designed to provide an understanding of basic concepts of actuarial/financialmathematics. The course touches most (but not all) syllabus topics for professional exam SOA-FM /CAS-2. Students who do well in this course will have a very strong jump start in preparing for examSOA-FM / CAS-2, but they should still expect that significant additional study will be needed to pass.Math 175 is a pre-requisite for all other Math Dept actuarial courses.InstructorGary Caine, FSAOffice:MS 5338Regular Office Hours:After all classes (in classroom if available; otherwise in MS 5338)Additional Office Hours:By appointmentEmail (for private matters):[email protected] for class-related itemswww.Piazza.comClass Times / Room: Mon & Wed (Sec 1: 2:00–3:50 pm; Sec 2: 4:00–5:50 pm) / Geology 6704Textbook for Interest Theory: Mathematical Interest Theory (2ndEdition) by Daniel and Vaaler, TheMathematical Association of America (2009) [1stEdition also fine]Textbook for Derivatives: Derivatives Markets by Robert McDonald, Addison Wesley. Ch 1-4,5.1-5.4ORA Basic Course in the Theory of Interest and Derivatives Markets: APreparation for the Actuarial Exam FM/2, Marcel B. Finan, Ch 57-68(available at http://faculty.atu.edu/mfinan/actuarieshall/mainf.pdf)Required calculator for class and exams: TI BA II Plus financial (regular or Professional)Exam Dates and Grading: - up to 30 points each*– Oct 10 exam, Oct 26 exam, Nov 14 exam(* will count only the 2 highest scores from these 3 exams)- up to 42 points – final exam (Monday, Dec 5, 3pm-6pm)- up to 8 points – Class participation (primarily Piazza contributions)Note: Maximum possible points = 110 (30 + 30 + 42 + 8). Students scoring at least 90are guaranteed an A- grade. Other cutoffs tbd (typically 80=B-, 70=C-, 60=D-, <60=F)Other policies:- No re-grading request will be allowed more than 7 days after the applicable scoring date.- Aside from allowed calculators*, electronic devices must be off and out of view during classes/tests.- No make-ups allowed for missed exams. Course grade of “Incomplete” is not available.- Taking the final exam is required to pass this course.- There will be no alternative grading scheme.* See https://www.soa.org/Education/Exam-Req/Exam-Day-Info/edu-id-calculators.aspx for list.Approximate Schedule of LecturesWeek Chapter Topics1 1 Introduction, growth of money, BA II Plus calculator2 2 Equations of value and yield rate3 3 Simple annuities4 4 Complex annuities5 5 Loan repayment6 6, 7 Bonds and Stocks7 8.3 Term structure of interest rates8 9 Duration, convexity and immunization9 *** Introduction: Options and ForwardContracts10 **** Option Strategies, Risk Management*** Ch 1,2 in McDonald text; Ch 57-62 in Finan text**** Ch 3,4,5 in McDonald text; Ch 63-68 in Finan