Mathematical Interest Theory provides a classic treatment of interest theory - how money grows with interest - and applies the tools of interest theory to the analysis of yield rates, bonds, stocks, and modern financial instruments. There is a chapter on arbitrage and financial derivatives ; it includes option pricing.

The text teaches and illustrates with over 240 carefully worked examples. Optional instructions on how to solve problems using the Texas Instruments BA II Plus and BA II Plus Professional financial calculators are included.

Mathematical Interest Theory has been approved as a text for SoA/CAS Exam FM/2; due to the lead time required by the joint examination committee, the book will first appear on the official syllabus for the May 2008 exam. Several major actuarial programs have already adopted the text for their interest theory courses.

This student-oriented introduction to the mathematics of interest covers the interest theory required by actuaries, by others in financial services, and by informed consumers. It provides a classic treatment of interest theory - how money grows with interest - and applies the tools of interest theory to the analysis of bonds, stocks, and modern financial instruments. Yield rates are introduced early and revisited as new financial settings are explored.

NOTE: The authors have created a guide on how to use this book to cover the FM/2 topics which is available at their website:
www.actuarialseminars.com