Description: The goal of this course is to introduce people to some basic financial products, their use in hedging and financing, their properties, and valuation. Securities such as bonds, puts, calls, forwards, and futures and their arbitrage relations will be discussed. Discrete-time stochastic models for securities prices will be introduced. Pricing and hedging (replication) of securities using these discrete-time models will be investigated. Martingales, risk-neutral valuation, and pricing by no-arbitrage will be covered. Black-Scholes option pricing formula and its hedging parameters and basic discrete-time interest rate models will be covered. Note that some of these topics may be omitted and others studied, as time and interests allow.

Term: A

Extra Information: Formerly listed as Applied Mathematics 9578a.

Course	Instructor(s)	Outline	Term	School Year
FM9578A001	Marcos Escobar-Anel		A	2016/2017
FM9578A001	Mark Reesor		A	2015/2016
FM9578A001	Mark Reesor		A	2014/2015