What do you do when your discipline is so rarely taught at the undergraduate level that there's no appropriate textbook for it? If you're Knox mathematics professor Kevin Hastings '76, the answer is obvious: You write it yourself.
Introduction to Financial Mathematics (CRC Press) is Professor Hastings' fourth textbook (he has also written books on the mathematics of operations research, on probability and statistics, and an introduction to probability using Mathematica software). He started working on it about three years ago, when he was unable to find a textbook for his introductory financial mathematics course that combined both actuarial science with the basics of financial portfolio valuation.
"To understand how to optimize financial portfolios," he says, "you need a bit of probability, in addition to understanding interest and annuities." He says that his course, and the new textbook, "are what students need to set them up not only to take the FM Exam for actuaries, but to prepare for later work in the financial mathematics major."
Hastings has noticed that beginning students have an easier time with money-related topics like interest and annuities than with more complex, probability-based calculations. Both his course and the textbook present concrete scenarios designed to help students grasp those more challenging concepts. "So long as they are patient and careful with computational work, they should perform well and learn a lot about financial issues."
The first draft of the manuscript, developed from notes and problems he put together as preparation for his MATH 227 lectures, was nearly complete before Hastings even had an official contract from the publisher. During the editing process, he also prepared a complete solution manual for the nearly 500 problems included in the book. The electronic version of the text includes extensive Mathematica-based content.
"I guess I started doing this because I very much like to write, and I enjoy the satisfaction of completing a long project," Hastings says. He is now considering a sequel that will focus on the even more complex material that he covers in MATH 327, including capital market theory and a deeper dive into option valuation.
Currently, there are about seven students majoring in financial mathematics at Knox, but Hastings' courses are also popular with students in economics. Alumni of the program have gone on to careers in insurance, investment banking, and corporate finance.
Hastings, who holds the Rothwell Stephens C. Distinguished Professorship in Mathematics, also served as registrar from 2001-2012, with a year's hiatus in 2008.