This course provides an introduction to the valuation of cash flows. Topics include: compound interest functions; valuation of annuities certain; loans repayable by instalments; comparison of value and yield of cash flow transactions; valuation of fixed interest securities, with and without tax on interest and capital gains; duration and volatility of securities; introduction to concept of immunisation and matching; consumer credit contracts.

Learning Outcomes

Upon successful completion, students will have the knowledge and skills to:

1. Define and describe the use of cash flow models, simple and compound rates of interest and discount as well as compare and distinguish between nominal and effective rates of interest and discount;
2. Describe various types of annuities and perpetuities and use them to solve financial transaction problems;
3. Describe equations of value and various tools like linear interpolation & annuity tables;
4. Compare capital budgeting decision tools like Net Present Values, Internal Rates of Return and Discounted Payback Periods;
5. Analyse basic fixed interest financial transactions like Loan Valuation, Fixed Interest securities (eg. Bonds) and employ the skills developed in this course to evaluate such transactions. Incorporate the effects of taxation on such financial transactions;
6. Understand and employ the term structure of interest rates to calculate forward and spot rates; and
7. Define interest rate risk in terms of duration and convexity of fixed interest products, using this to define immunisation and assess its use in mitigating interest rate risk.

Research-Led Teaching

N/A

Field Trips

N/A

Additional Course Costs

N/A

Examination Material or equipment

The final exam is closed book. Student is allowed to bring a non-programmable calculator. The formula sheet, and actuarial tables will be provided in the exam.

Centrally scheduled examinations through Examinations, Graduations & Prizes will be timetabled prior to the examination period. Please check ANU Timetabling for further information.

Required Resources

All course notes and materials will be provided via Wattle. You will need access to a non-programmable calculator to complete exercises required for this course. You will need access to a computer to get the materials necessary for the course. We will use MS Excel in this course. Some classwork and tutorial questions and solutions will be illustrated using MS Excel. Learning guides and short video lectures will be made available on wattle for students to learn the application of the concepts taught in this course. Some assignment questions will require the use of MS Excel or a spreadsheet program.

Recommended Resources

There are no prescribed textbooks for this course.

Staff Feedback

Students will be given feedback in the following forms in this course:

• Following each In-Class Test, feedback may be given to the whole class about the general performance on each test.
• Students will also have the opportunity to speak with the tutors and the lecturer about their performance in the assignments.
• Zoom or in-person consultations. Times and instructions will be advised on wattle.

Student Feedback

ANU is committed to the demonstration of educational excellence and regularly seeks feedback from students. Students are encouraged to offer feedback directly to their Course Convener or through their College and Course representatives (if applicable). Feedback can also be provided to Course Conveners and teachers via the Student Experience of Learning & Teaching (SELT) feedback program. SELT surveys are confidential and also provide the Colleges and ANU Executive with opportunities to recognise excellent teaching, and opportunities for improvement.

Other Information

Scaling

Your final mark for the course will be based on the raw marks allocated for each of your assessment items. However, your final mark may not be the same number as produced by that formula, as marks may be scaled. Any scaling applied will preserve the rank order of raw marks (i.e. if your raw mark exceeds that of another student, then your scaled mark will exceed the scaled mark of that student) and may be either up or down.

Referencing Requirements

Please see the links on the Wattle site, under the file named “ANU and College Policies, Program Information, Student Support Services and Assessment”. For a more interactive guide on what this is all about, please see http://library.acadiau.ca/tutorials/plagiarism/.

Support for Students

The University offers a number of support services for students. Information on these is available online from http://students.anu.edu.au/studentlife/.

Class Schedule

Week/Session	Summary of Activities	Assessment
1	Cash-flow models. Simple and compound interest. Accumulated and present values.
2	Nominal and effective rates of interest and discount. Force of interest.
3	Basic annuities and their valuation.
4	Advanced annuities (Perpetuities. Continuous, increasing, decreasing and indexed annuities).
5	Equations of value. Introduction to linear interpolation and annuity tables. Dealing with inflation.	In-Class Test 1 (Tutorial Time Week 5)
6	Loan valuation and payments. Capital budgeting including NPV, IRR and DPP.
7	Measuring investment performance. TWRR and MWRR.
8	Valuation of fixed interest securities, with and without tax on interest and capital gains.
9	Calculating yields. Allowing for callable features and inflation. Extending to property and share valuation.	In-Class Test 2 (Tutorial Time Week 9)
10	Yield curve and term structure of interest rates. Calculating forward and spot rates.	Assignment Due (Friday Week 10)
11	Interest rate risk: duration, effective duration and convexity. Conditions for and determination of immunisation.	In-Class Test 3 (Tutorial Time Week 11)
12	Immunisation exercises and revision

Tutorial Registration

Interactive workshops will be held weekly on campus (starting from week 1). ANU utilises MyTimetable to enable students to view the timetable for their enrolled courses, browse, then self-allocate to small teaching activities / tutorials so they can better plan their time.

Tutorials will be held weekly on campus (starting from week 2). Tutorial registration will be available two weeks prior to the beginning of the semester and will close at the end of week 1. More details can be found on the Timetable webpage (https://www.anu.edu.au/students/program-administration/timetabling).

Assessment Summary

Assessment task	Value	Due Date	Return of assessment	Learning Outcomes
In-Class Test 1	5 %	19/08/2024	30/08/2024	1, 2, 3, 4, 5, 6
In-Class Test 2	5 %	30/09/2024	11/10/2024	1, 2, 3, 4, 5, 6
In-Class Test 3	5 %	14/10/2024	25/10/2024	1, 2, 3, 4, 5, 6
Assignment	20 %	11/10/2024	25/10/2024	1, 2, 3, 4, 5
Final Exam	70 %	31/10/2024	28/11/2024	1, 2, 3, 4, 5, 6, 7

* If the Due Date and Return of Assessment date are blank, see the Assessment Tab for specific Assessment Task details

Policies

ANU has educational policies, procedures and guidelines , which are designed to ensure that staff and students are aware of the University’s academic standards, and implement them. Students are expected to have read the Academic Integrity Rule before the commencement of their course. Other key policies and guidelines include:

• Academic Integrity Policy and Procedure
• Student Assessment (Coursework) Policy and Procedure
• Extenuating Circumstances Application
• Student Surveys and Evaluations
• Deferred Examinations
• Student Complaint Resolution Policy and Procedure
• Code of practice for teaching and learning

Assessment Requirements

The ANU is using Turnitin to enhance student citation and referencing techniques, and to assess assignment submissions as a component of the University's approach to managing Academic Integrity. For additional information regarding Turnitin please visit the Academic Skills website. In rare cases where online submission using Turnitin software is not technically possible; or where not using Turnitin software has been justified by the Course Convener and approved by the Associate Dean (Education) on the basis of the teaching model being employed; students shall submit assessment online via ‘Wattle’ outside of Turnitin, or failing that in hard copy, or through a combination of submission methods as approved by the Associate Dean (Education). The submission method is detailed below.

Moderation of Assessment

Marks that are allocated during Semester are to be considered provisional until formalised by the College examiners meeting at the end of each Semester. If appropriate, some moderation of marks might be applied prior to final results being released.

Participation

Course content delivery will take the form of weekly on-campus lectures (recorded and available via echo360 on Wattle), weekly on-campus workshops (recorded and available via echo360 on Wattle) and weekly tutorials, all delivered on campus. Students are expected to have viewed the course notes, and/or attemped the tutorial questions before classes. Attendance at lectures, workshops and tutorials, while not compulsory, is expected in line with “Code of Practice for Teaching and Learning”, clause 2 paragraph (b).

Weekly consultations with the lecturer and the tutor(s) will be conducted either in-person or over Zoom. More information will be provided on wattle in Week 1.

Examination(s)

The final examination will be an on-campus invigilated exam during the university examination period at the end of the semester. The exam will be closed book. Student is allowed to bring a non-programmable calculator. The formula sheet, and actuarial tables will be provided in the exam.

Centrally scheduled examinations through Examinations, Graduations & Prizes will be timetabled prior to the examination period. Please check ANU Timetabling for further information.

Assessment Task 1

In-Class Test 1

The details of the in-class tests are:

• Students will be required to sit for 3 In-Class Tests throughout the semester, during the tutorial times in weeks 5, 9, and 11, respectively. They are on-campus invigilated tests.
• The best 2 out of 3 in-class test results will count towards a student's overall course grade, with each test worth 5% and contributing 10% overall.
• Each In-Class Test will last 10 - 20 minutes. It is a closed-book test. It can include any combination of written answers, multiple-choice questions, and calculations.
• In-Class Test solutions, feedback and marks will be provided on the Wattle page the week after each test. Students will be able to collect their marked In-Class Tests in the tutorial the following week.
• This assessment task must be completed in pen (NOT PENCIL).
• More details will be provided during the lectures and on Wattle no later than Week 4's lecture.
• The In-Class Tests cannot be deferred. Students MUST sit for the test during the tutorial time; otherwise, the test will not count and a mark of 0 will be awarded.

The content for the in-class tests is as follows:

• In-Class Test 1 covers topics from week 1 (cash-flow models, simple and compound interest, accumulated and present value topics) to week 4 (advanced annuities topic).
• In-Class Test 2 covers topics from week 5 (equations of value, linear interpolation, annuity table, inflation topic) to week 8 (valuation of fixed interest securities topic).
• In-Class Test 3 covers topics from week 9 (calculating yields, callable bonds, and share valuation topic) to week 10 (yield curve, term structure, spot rates, and forward rates topic).

Value: The best 2 out of 3 counts, with 5% each. 10% overall.

Due date: Tutorial time in Week 5, 9, 11 for In-Class Test 1, 2, 3 respectively

Assessment Task 2

In-Class Test 2

Please refer to the details covered in 'Assessment Task 1'.

Assessment Task 3

In-Class Test 3

Please refer to the details covered in 'Assessment Task 1'.

Assessment Task 4

Assignment

• Students are expected to complete this assignment individually or in a group of a maximum of 3. Students sharing the same course code may form groups according to their own preferences.
• Students need to submit it using the Wattle assignment function. 
• Assignment questions will be provided to all students no less than two weeks before the due date on the course Wattle page.
• The assignment is designed to assess the student's application of the various topics covered in this course, up to and including the material in week 9.
• Completing this assignment will require the use of MS Excel.
• This assignment is worth 20% of the overall grade and is not redeemable.
• Extensions of the assignment are unavailable.
• More details will be provided during the lectures and on Wattle no later than Week 8's lecture.
• The assignment feedback will be provided no later than Friday 25th October 2024 (Week 12) via the wattle assignment function.
• No late submission of assessment tasks after the due date will be permitted. If an assessment task is not submitted by the due date, a mark of 0 will be awarded. If a student is unable to submit the assignment on time due to a valid reason (such as illness or other serious circumstances) they must apply for an extension through the Extension Request platform on Wattle as soon as possible (before the due date). Appropriate documentation (e.g., medical certificate) may be required to support the request. Extensions are granted at the discretion of the course convenor and are not guaranteed.

Value: 20%

Due date: Friday 11th October 3:00 pm AEST (Week 10)

Assessment Task 5

Final Exam

• The final examination will be an on-campus invigilated exam during the university examination period at the end of the semester.
• The exam will be a closed book. A student is allowed to bring a non-programmable calculator.
• The formula sheet and actuarial tables will be provided in the exam.
• The exam will include a mixture of theoretical and numerical questions.
• It will be a 3-hour exam that covers the entire semester's contents.
• Examination materials and conditions will be notified to all students via Wattle no later than Week 10 of the semester. 
• The exam will be centrally timetabled and details of the final examination timetable will be made available on the ANU Timetabling website.

Value: 70%

Date: Specific date to be advised.

Academic Integrity

Academic integrity is a core part of the ANU culture as a community of scholars. The University’s students are an integral part of that community. The academic integrity principle commits all students to engage in academic work in ways that are consistent with, and actively support, academic integrity, and to uphold this commitment by behaving honestly, responsibly and ethically, and with respect and fairness, in scholarly practice.

The University expects all staff and students to be familiar with the academic integrity principle, the Academic Integrity Rule 2021, the Policy: Student Academic Integrity and Procedure: Student Academic Integrity, and to uphold high standards of academic integrity to ensure the quality and value of our qualifications.

The Academic Integrity Rule 2021 is a legal document that the University uses to promote academic integrity, and manage breaches of the academic integrity principle. The Policy and Procedure support the Rule by outlining overarching principles, responsibilities and processes. The Academic Integrity Rule 2021 commences on 1 December 2021 and applies to courses commencing on or after that date, as well as to research conduct occurring on or after that date. Prior to this, the Academic Misconduct Rule 2015 applies.

 

The University commits to assisting all students to understand how to engage in academic work in ways that are consistent with, and actively support academic integrity. All coursework students must complete the online Academic Integrity Module (Epigeum), and Higher Degree Research (HDR) students are required to complete research integrity training. The Academic Integrity website provides information about services available to assist students with their assignments, examinations and other learning activities, as well as understanding and upholding academic integrity.

Online Submission

The assignment is to be submitted online on Wattle at the pre-specified location via the assignment function. You must attach an assignment cover sheet. Please keep a copy of the tasks completed for your records.

Hardcopy Submission

The assignment submission in the course is online via Wattle.

Late Submission

No submission of assessment tasks without an extension after the due date will be permitted. If an assessment task is not submitted by the due date, a mark of 0 will be awarded.

Referencing Requirements

The Academic Skills website has information to assist you with your writing and assessments. The website includes information about Academic Integrity including referencing requirements for different disciplines. There is also information on Plagiarism and different ways to use source material. Any use of artificial intelligence must be properly referenced. Failure to properly cite use of Generative AI will be considered a breach of academic integrity.

Returning Assignments

Assignment feedback will be returned via the wattle assignment function.

Extensions and Penalties

Extensions and late submission of assessment pieces are covered by the Student Assessment (Coursework) Policy and Procedure. Extensions may be granted for assessment pieces that are not examinations or take-home examinations. If you need an extension, you must request an extension in writing on or before the due date. If you have documented and appropriate medical evidence that demonstrates you were not able to request an extension on or before the due date, you may be able to request it after the due date.

Resubmission of Assignments

More details will be provided during the lectures and on Wattle no later than Week 8's lecture.

Privacy Notice

The ANU has made a number of third party, online, databases available for students to use. Use of each online database is conditional on student end users first agreeing to the database licensor’s terms of service and/or privacy policy. Students should read these carefully. In some cases student end users will be required to register an account with the database licensor and submit personal information, including their: first name; last name; ANU email address; and other information.
In cases where student end users are asked to submit ‘content’ to a database, such as an assignment or short answers, the database licensor may only use the student’s ‘content’ in accordance with the terms of service – including any (copyright) licence the student grants to the database licensor. Any personal information or content a student submits may be stored by the licensor, potentially offshore, and will be used to process the database service in accordance with the licensors terms of service and/or privacy policy.
If any student chooses not to agree to the database licensor’s terms of service or privacy policy, the student will not be able to access and use the database. In these circumstances students should contact their lecturer to enquire about alternative arrangements that are available.

Distribution of grades policy

Academic Quality Assurance Committee monitors the performance of students, including attrition, further study and employment rates and grade distribution, and College reports on quality assurance processes for assessment activities, including alignment with national and international disciplinary and interdisciplinary standards, as well as qualification type learning outcomes.

Since first semester 1994, ANU uses a grading scale for all courses. This grading scale is used by all academic areas of the University.

Support for students

The University offers students support through several different services. You may contact the services listed below directly or seek advice from your Course Convener, Student Administrators, or your College and Course representatives (if applicable).

• ANU Health, safety & wellbeing for medical services, counselling, mental health and spiritual support
• ANU Accessibility for students with a disability or ongoing or chronic illness
• ANU Dean of Students for confidential, impartial advice and help to resolve problems between students and the academic or administrative areas of the University
• ANU Academic Skills supports you make your own decisions about how you learn and manage your workload.
• ANU Counselling promotes, supports and enhances mental health and wellbeing within the University student community.
• ANUSA supports and represents all ANU students