1

Introduction and Overview

Scope the book

Advantages of mathematics in Excel

Overview of Excel environment

Features and techniques

2

Basic Financial Arithmetic

Simple and compound interest

Nominal and effective rates

Effect of compounding

Conversions and comparisons

3

Cash Flows

Discounted cash flow

4

Fixed income products

Yield calculations

Price

Accrued interest

5

Bond risks

Duration

Modified duration

Convexity

Zero coupons

6

Floating rate securities

Effective margin

7

Amortisation

Amortising loans

Fees on bonds and loans

Amortisation

Odd periods

8

Swaps

Basic mechanisms

Valuing swaps

Interest rates

Currency

Forward and delayed start

Amortising swaps

9

Forward interest rates

Pricing

Yield curves

Odd periods

10

Futures

Structure and calculations

Hedging mechanisms

Bond futures

11

Foreign exchange

Money market

Spot rates

Forward pricing

Arbitrage mechanisms

12

Options

Options pricing

Components of options price

Payoffs

Pricing models (Binomial, Black Scholes etc.)

Put call parity

Greeks

Interest rates, bonds

Trading strategies

13

Real Options

Real Options

Delay, abandon or expand

14

Equity valuation

Types of models

Free cash flow valuation

Multi-period dividend discount models

Adjusted present value

Economic profit

15

Leasing

Economic of leasing

Interest Rates

Amortisation

Accounting

Settlements

Evaluation

16

Basic Statistics

Descriptive statistics

Distribution shapes

Sampling

Variance and standard deviation

Probability distributions

Hypothesis testing

Correlation, regression and standard errors