

Course ID:  RMIN 4100. 3 hours. 
Course Title:  The Theory of Interest 
Course Description:  An introduction to actuarial cash flow models. Simple,
compound, and effective interest functions are analyzed and
used in the calculation of present value and future values of
various types of annuities as well as more complex cash flow
streams. 
Oasis Title:  THEORY OF INTEREST 
Prerequisite:  MATH 2260 or permission of department 
Semester Course Offered:  Offered every year. 
Grading System:  AF (Traditional) 

Course Objectives:  1) Teach actuarial cash flow models, which constitute the
theoretical foundation of actuarial science.
2) Describe different annuities and their cash flows.
3) Provide an understanding of the time value of money among
different types of annuities as well as more complex cash flow
streams.
4) Develop analytical problem solving skills to solve complex
problems from first principles rather than memorization.
5) Incorporate examples and problems both in class and in
homework.
6) Give an opportunity for students to work together in groups
to complete homework. This will allow students to learn how to
work together in a team and how to effectively communicate
quantitative ideas.
7) Cover most of the material and prepare students for Exam 2
of the Casualty Actuarial Society and Exam FM of the Society of
Actuaries. 
Topical Outline:  This course provides an introduction to actuarial cash flow
models. The course covers most of the material for Exam 2 of
the Casualty Actuarial Society and Exam FM of the Society of
Actuaries.
1) The measurement of interest
2) Solution of problems in interest
3) Basic annuities
4) More general annuities
5) Amortization schedules and sinking funds
6) Generalized cash flow models
7) Yield rates
8) More advanced financial analysis
9) The term structure of interest rates
10) Risk Management applications
11) Overview of financial instruments and their cash flows 