This course will focus on the financial theory of asset pricing. While this course will be broad in scope and will cover many different topics relating to finance, a particular emphasis will be placed on topics related to financial markets. The primary topics covered in the class include present value, asset valuation, expected utility, portfolio selection, and the trade-off between risk and return.
At the end of the term, students will be able to:
- Define, model and price various financial instruments, including stocks and bonds
- Construct optimal portfolios, based on mean-variance efficiency and utility theory, using probability and optimization
- Use the trading lab to research stocks and select a portfolio of stocks in one sector for semester-long “stock pitching” project.
- Price stocks, bonds and work with the term structure of interest rates.
- Use portfolio theory to select mean-variance optimal portfolios.
- Provide sector analysis and insight on individual stocks within a sector.
- Improve professional presentation skills with in class “stock pitches.”
(For Intake AY2019)
- 10.004 Advanced Math II, 40.001 Probability (or 30.003/50.034 Introduction to Probability and Statistics)
(For Intake AY2020 and onwards)
Image Credit (http://live.iugaza.edu.ps/OcwWeb/Sloan-School-of-Management/15-402Finance-Theory-IISpring2003/CourseHome/index.htm)