This is a quantitative course introducing the fundamental principles of asset valuation within the framework of modern portfolio theory. The key analytical concepts...More >>
This is a quantitative course introducing the fundamental principles of asset valuation within the framework of modern portfolio theory. The key analytical concepts are present value, option value, risk/diversification and arbitrage. These tools are used to value stocks, bonds, options, and other derivatives, with applications to the structure of financial markets, portfolio selection, and risk management.
Prerequisite Knowledge for Foundations of Finance: Foundations of Finance is a core course that assumes no prior background in finance. However, the class requires knowledge of basic economic and statistical concepts. Economics a) Supply and demand curves, including how shifts in the curves change the equilibrium price b) Indifference curves The core economics class, Firms & Markets, will cover these materials in time for our use. If you have not already mastered this content, you should take the Firms & Markets core course. Statistics a) Mean, standard deviation, covariance and correlation as descriptive statistics b) Probability statements based on the area under the normal curve c) The regression coefficient as a summary statistic Your core Statistics & Data Analysis class will cover all of this material. A statistics primer is available on Professor Silber's website to help you get started.