International Council of Islamic Finance Educators

Introduction to Financial Mathematics

Published in 2015



Topic Content


Introduction to Financial Mathematics

– Understanding the Importance of Mathematics in Finance and Economics

– The Role of Mathematics in Finance


Basic Mathematical Operations

– Explaining the Exponent: Positive, Negative and Fractional

– Computation Rules of Exponent

– Application of Exponent


The Theory of Interest (Simple Interest)

– Understand the Concept of Interest Rate

– Explain the Fundamentals of Interest Rate, and Its Role in Finance

– Derive and Compute the Simple Interest

– Islam and Simple Interest


The Compound Interest

– Derive and Compute the Compound Interest

– Comparison Between Simple and Compound Interest Rate


The Time Value of Money – Part 1

– Explaining the Time Value of Money

– Understand the Concept of Present Value

– Computation of the Present value for Single Amounts


The Time Value of Money – Part 2

– Understand the Concept of Futurevalue of Money

– Computation of the Future Value of Single Amounts

– The Relationship between the Present Value and Future Value

– Islam and Time Value of Money


Basic Probability Theory Concepts

– Understanding the Basic Concepts of Probability and Statistics as the Mean, Variance, and Standard Deviation as well as their Meaning in Finance

– Basic Rules of Probability


Risk and Return

– Understand Risk and Return in Finance

– Computation of Risk and Return

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