SDST2902 Financial mathematics (6 credits) Academic Year 2025
Offering Department SCDS (Department of Statistics and Actuarial Science) Quota ---
Course Co-ordinator Prof K C Cheung, SCDS (Department of Statistics and Actuarial Science) < kccg@hku.hk >
Teachers Involved (Prof K C Cheung,Statistics & Actuarial Science)
Course Objectives This course introduces the fundamental concepts of financial mathematics which plays an important role in the development of basic actuarial techniques. Practical applications of these concepts are also covered.
Course Contents & Topics Key topics include: measurement of interest, annuities certain; discounted cash flow analysis; yield rates; amortization schedules; bonds and related securities; practical applications such as real estate mortgage and short sales; and key terms of financial analysis such as yield curves, spot rates, forward rates, duration, convexity, and immunization.
Course Learning Outcomes
On successful completion of this course, students should be able to:

CLO 1 understand basic concepts of financial mathematics
CLO 2 calculate present value, current value, and accumulated value for sequences of non-contingent payments
CLO 3 understand key concepts concerning loans and perform related calculations
CLO 4 understand key concepts concerning bonds and perform related calculations
CLO 5 understand term structure of interest rates and cash flow matching and immunization, to perform related calculations
Pre-requisites
(and Co-requisites and
Impermissible combinations)		 Pass in SDST2901, or already enrolled in this course; and
Not for students who have passed in SDST3615, or already enrolled in this course.
Only for students admitted in 2025 and thereafter.
Course Status with Related Major/Minor/Professional Core 2025 BSc in Actuarial Science ( Core/Compulsory )
Course to PLO Mapping 2025 BSc in Actuarial Science < PLO 1,3,4,5,6 >
Offer in 2025 - 2026 Y        2nd sem    Examination May     
Offer in 2026 - 2027 Y
Course Grade A+ to F
Grade Descriptors
A Demonstrate thorough mastery at an advanced level of extensive knowledge and skills required for attaining all the course learning outcomes. Show strong analytical and critical abilities and logical thinking, with evidence of original thought, and ability to apply knowledge to a wide range of complex, familiar and unfamiliar situations. Apply highly effective organizational and presentational skills.
B Demonstrate substantial command of a broad range of knowledge and skills required for attaining at least most of the course learning outcomes. Show evidence of analytical and critical abilities and logical thinking, and ability to apply knowledge to familiar and some unfamiliar situations. Apply effective organizational and presentational skills.
C Demonstrate general but incomplete command of knowledge and skills required for attaining most of the course learning outcomes. Show evidence of some analytical and critical abilities and logical thinking, and ability to apply knowledge to most familiar situations. Apply moderately effective organizational and presentational skills.
D Demonstrate partial but limited command of knowledge and skills required for attaining some of the course learning outcomes. Show evidence of some coherent and logical thinking, but with limited analytical and critical abilities. Show limited ability to apply knowledge to solve problems. Apply limited or barely effective organizational and presentational skills.
Fail Demonstrate little or no evidence of command of knowledge and skills required for attaining the course learning outcomes. Lack of analytical and critical abilities, logical and coherent thinking. Show very little or no ability to apply knowledge to solve problems. Organization and presentational skills are minimally effective or ineffective.
Communication-intensive Course N
Course Type Lecture-based course
Course Teaching
& Learning Activities
Activities Details No. of Hours
Lectures 36.0
Tutorials tutorials/example classes 12.0
Reading / Self study 100.0
Assessment Methods
and Weighting
Methods Details Weighting in final
course grade (%)		 Assessment Methods
to CLO Mapping
Assignments Coursework (assignments, tutorials, class test(s) and participation) 40.0 1,2,3,4,5
Examination One 3-hour written examination 60.0 1,2,3,4,5
Required/recommended reading
and online materials		 Kellison, S. G.: The Theory of Interest (Irwin: Illinois, 2008, 3rd edition)
Broverman, S.A., Mathematics of Investment and Credit (Eighth Edition), 2024, ACTEX Publications.
Course Website http://moodle.hku.hk
Additional Course Information NIL