Financial Markets

Course description

Learning Objectives

• Discuss the relevance of this course in everyday life and the importance of ethical judgements in finance.
• Understand the main sources of risk a security is subject to, and the main methods used to evaluate risk of an entire portfolio.
• Describe why an investment may be considered high risk, and the sources of the so called 'disaster risk.'
• List the key events in the history of insurance, and how insurance differs between the state and national level in the U.S.
• Identify the qualitative differences between the normal and fat tail distributions, and give examples of risk pooling, moral hazard and selection bias.
• Understand the principle of risk diversification.
• Explain the Capital Asset Pricing Model (CAPM), and the role of short-selling within the model.
• Recall how to compute optimal risk-return portfolios.
• Understand the concept of efficient frontier in portfolio management.