Author Description

Financial Mathematics for Actuaries: Updated Edition is an introductory textbook on the mathematics of interest rates. It is written at a level of rigor required of students who major in actuarial science and prepares them for further analysis of financial instruments. This book emphasizes an intuitive treatment of the mathematics of finance and insurance, with a particular focus on applications. Students will find many illustrative examples that apply mathematical techniques to financial products and personal financial management. For this latest updated edition, a whole section in the chapter on bond management has been revised, extended and placed under a new heading called Immunization Strategies. Contents About the Authors v Preface to the Updated Edition vii Preface to the 1st Edition ix List of Mathematical Symbols xi Chapter 1 Interest Accumulation and Time Value of Money 1 Chapter 2 Annuities 39 Chapter 3 Spot Rates, Forward Rates and the Term Structure 73 Chapter 4 Rates of Return 99 Chapter 5 Loans and Costs of Borrowing 141 Chapter 6 Bonds and Bond Pricing 181 Chapter 7 Bond Yields and the Term Structure 207 Chapter 8 Bond Management 239 Chapter 9 Stochastic Interest Rates 285 Appendix A Review of Mathematics and Statistics 307