Foundations of Finance

Catalog description

This course is a rigorous, quantitative introduction to financial market structures and financial asset valuation. It has three goals: 1. To develop the concepts of arbitrage, the term structure of interest rates, diversification, the Capital Asset Pricing Model (CAPM), valuation of an individual firm, efficient and inefficient markets, performance evaluation of investment management, and valuation of derivative securities, particularly options. 2. To provide sufficient background knowledge about financial institutions and market conventions for students seeking an overview of capital markets as an introduction to advanced finance courses. 3. To introduce the principles of asset valuation from an applied perspective. The majority of the class is concerned with the valuation of financial securities. These valuation issues are heavily used in portfolio management and risk management applications. Throughout the course every effort will be made to relate the course material to current financial news. To take this course, students must be comfortable with statistics, linear algebra, calculus, and microeconomics. Prerequisites: ECON-SHU 3 Microeconomics and ( BUSF-SHU 101 Statistics for Business & Econ or MATH-SHU 235 Probability and Statistics). Fulfillment: This course satisfies BUSF/BUSM Major core; IMB Business Flexible Core or elective; Data Science concentration in Finance/Marketing. It counts for the Stern Minor.