B8306-004: Capital Markets & Investments
MW - Full Term, 10:45AM to 12:15PM
Instructor: Paul TetlockDownload Syllabus
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This course has three goals:
1. To introduce the principles of asset valuation from an applied perspective. The majority of the class is concerned with the valuation of financial securities. The valuation issues to be discussed are heavily used in portfolio management and risk management applications.
2. To develop the following concepts: arbitrage, the term structure of interest rates, diversification, the Capital Asset Pricing Model (CAPM), efficient and inefficient markets, performance evaluation, and derivative securities, particularly options.
3. To provide sufficient background knowledge for students seeking an overview of capital markets and an introduction to advanced finance courses.
The main topics can be summarized in seven groups:
1. 2 classes: Introductory Concepts
2. 4 classes: Valuation of Fixed Income Securities
3. 2 classes: Valuation of Securities with Risky Payoffs
4. 4 classes: Portfolio Choice
5. 3 classes: Evaluating Investment Performance
6. 3 classes: Behavioral Finance
7. 6 classes: Valuation of Options
Throughout the course, we will address two basic questions:
1. Which methods do we use to value securities?
2. How do we choose securities to maximize expected return for a given amount of risk?