University of Illinois at Urbana-Champaign

Department of Mathematics - Actuarial Science Program

MATH 210 - Theory of Interest

Spring 2006

Office Hours during Finals Week are as follows:

Thursday, May 11:  10am-noon; 1pm-5pm

319 Gregory Hall

2:00-2:50pm  Monday, Wednesday, Friday

Course Web Site:  http://www.math.uiuc.edu/~jthomps7/math210.html

Instructor:         Jared J. Thompson

Email:               jthomps7@uiuc.edu (preferred method of communication)

Office Hours:    Tuesday 10:15-12:30 in southeast corner of B1 Coble Hall

Thursday 12:30-3:50 in southeast corner of B1 Coble Hall, or by appointment

Required Text:  Kellison, Stephen.  The Theory of Interest (1991, 2^nd Edition).

Link to gradebook FINAL UPDATE (May 15)

Syllabus and Practice Problems for SOA/CAS Exam FM/2

Course Overview:

Catalog Description:  Study of compound interest and annuities; applications to problems in finance. Prerequisite: Two semesters of calculus.

We will cover most of Chapters 1-9 of the Kellison text.  We begin by developing a conceptual framework and an introduction of key terms (i.e. interest, discounting, compounding, and present value) and actuarial notation.  Other foundational topics will include basic problem solving and simple & complex annuities.  From there we will apply our knowledge to more advanced problems--examining yield rates, net present value, and loan amortization.  The course's final portion concerns application to financial market instruments--bond pricing, duration, and stocks.

This course also covers all conceptual material for SOA/CAS Exam FM/2.  For those planning on taking this exam in May, I highly recommend concurrent registration in Math 370 (Section Z).  That one-credit course uses a very problem-solving-oriented approach.

How to succeed in this course:  Although Math 210 places some emphasis on problem solving, this is a largely conceptual course.  There are many wonderful formulae and shortcuts you will learn, but it is more important to comprehend the overarching "big picture" concepts.  For this reason, you will be best served to take about a half hour after each class period to review your lecture notes and strengthen your understanding of fundamental concepts.

Assessments and Grading:

Homework:  There will be nine homework assignments in this course.  Each assignment will consist of ten questions--each worth one point.  As assignments will be posted on the course web site, it is imperative that you check the course web page several times a week.  Homework assignments will be due at the beginning of class on Fridays of most non-exam weeks.  Late homework or assignments submitted via e-mail will not be accepted.

All work leading to solutions should be written out.  For each problem, graders will assign a grade of 0, 1/2, or 1 according to the following:

• A score of 0 is given if either nothing was written, or if the grader could not determine how any written work related to a correct solution.

•  A score of 1/2 is given to imperfect solutions that show reasonable progress toward an answer.  Graders are allowed to determine what "reasonable" means for each problem.

•  A score of 1 will be given to perfect, legibly-written solutions that show all work leading to the correct answer provided.

Missed homework assignments may not be made up.  In calculating your final grade, however, your lowest homework grade will be dropped.

In-Class Assignments:  There will be twelve in-class assignments over the course of the semester.  I will hand out these assignments near the end of the class period sporadically throughout the semester.  Each assignment consists of two short problems--each worth one point.  Students are allowed to work in small groups, but each student must submit their own sheet.  Scoring will follow the same procedures outlined above.  A missed in-class assignment may not be made up.  Consequently, although class attendance is not required, frequent absenteeism may lower your final grade.  In calculating your final grade, however, your lowest two in-class assignment grades will be dropped.

Examinations:  There will be two fifty-minute midterm exams worth 60 points each:

                        Exam 1:           Wednesday, February 22, in class

                        Exam 2:           Wednesday, April 5, in class            

The comprehensive final examination (80 points) will be administered during the time slot designated by the University:

                        Final Exam:      Friday, May 12 (1:30-4:30)

Exams may not be made up or taken at different times.  Generally, the grade weight for a missed exam, provided there is a valid excuse, will accrue equally to any remaining exams.  If you are unable to take an exam, you must provide a valid excuse with proper documentation on or before the day of the exam.

Semester Grades:

Homework (8 at 10 pts each)                                       80 points          26.67%

In-Class Assignments    (10 at 2 pts each)                     20 points          6.67%

Mid-Term Exam 1                                                        60 points          20%

Mid-Term Exam 2                                                        60 points          20%

Final Exam                                                                   80 points          26.67%           

Total                                                                           300 points       100%

The preceding is a preliminary grading scale for this course.  This will establish the minimum grade you will receive if you earn a given number of points.  For example, if you earn 265 out of 300 points, your grade will be no worse than a B+.

Any "curving" of grades will occur at the end of the semester.  Curving will occur if and only if the median student score for the course is less than 85%.  If a curve occurs, each student will receive an equal amount of points.  The amount of the curve will be such that the median adjusted score for the class is 85%.  For example, if the median score for the class is 82%, each student will receive nine points (3%) added to their total semester score.  After curving has occurred, adjusted grades will be assigned based on the scale above.  Fractional point totals (those ending in one-half) will be rounded up to the nearest whole point.

One of my goals in teaching this course is to make the grading as transparent as possible.  As such, I will ask each student to provide me with a six-digit secret number known only to each individual and me.  Periodically throughout the semester, I will publish the gradebook for the entire class on the web site using your secret numbers instead of names.  This will enable you to better gauge your progress in the course.

Accessibility Statement:  To ensure that disability-related concerns are properly addressed throughout the semester, students with disabilities who require reasonable accommodations to participate in this class are asked to contact me within the first two weeks of the course.

Important Dates for this Class:

Wed., January 18         First day of class

Wed., February 22       Exam #1

Wed, April 5                Exam #2

Wed., May 3                Last day of class

Fri., May 12                 Final Exam (1:30-4:30)
 

Other Important Dates:

Tues, February 21        Paper & Pencil Version of Exam 1/P

February 21-23            Computer-Based Version of Exam 1/P

Wed., March 15           Registration Deadline for Exam 1/P

Thurs., March 16          Registration Deadline for CAS Exam 3

Sat., April 1                  Registration Deadline for Exam 2/FM, M, and 4/C

Wed., April 26             CAS Exam 3

May 16-19                   Computer-Based Version of Exam 1/P

Wed., May 17              Exam 4/C

Thu., May 18               SOA Exam M

Thu., May 25               Exam 2/FM

                                                                                                               Summary of Class Periods