The course aims at comprehending and mastering concepts as diverse as uncertainty, economic risk, and the functioning of the main financial tools required to protect economic agents' risk exposure. In the first part of the course, basic notions about the theory of expected utility and risk aversion will be introduced with the aim of comprehending how rational individuals make optimal decisions under uncertainty. In the second part, this method will be applied to study how investors optimally choose financial assets and construct efficient portfolios. The second part's objective is to understand the main financial models, such as the Capital Asset Pricing Model, their empirical estimation, using financial data, as well as their limits, through the analysis of the event studies. In the last part, the main financial tools will be analyzed using the conceptual framework introduced in the previous two parts. Futures, derivatives, options, and bonds will be analyzed.

PART I: Risk and uncertainty

1. Expected utility

2. Risk aversion

3. Choice under uncertainty 

PART II: Financial markets: models and estimators 

4. Stock markets and portfolio choice

5. Mean-variance

6. Capital Asset Pricing Model (CAPM)

7. CAPM estimators 

8. Arbitrage

9. Market efficiency and abnormal returns: Event study

PART III: Main financial instruments

10. Futures and derivatives

11. Options

12. Bonds

BASIC MATHEMATICS AND STATISTICS if it is present in the study plan

POLITICAL ECONOMICS if it is present in the study plan

- Knowledge and comprehension capability of concepts of uncertainty, risk, and of the main financial models and estimators.

- Knowledge and comprehension capability tested in class through the discussion of specific cases and exercises on Microsoft Excel.

- Self-judgement: the student shall be able to comprehend, analyze, and compare complex real-life cases and to apply the new tools.

- Communication skills: the student shall be able to comprehend and use the financial jargoon

- Comprehension capability: the student will be able to develop cognitive models to be used in the future experience in the job market.

The teaching material prepared by the lecturer in addition to recommended textbooks (such as for instance slides, lecture notes, exercises, bibliography) and communications from the lecturer specific to the course can be found inside the Moodle platform › blended.uniurb.it

Microsoft Excel exercises will be presented and discussed in class. Seminars.

Teaching

Teaching will be supported by presentation slides and Microsoft Excel worksheets. 

Attendance

Constant attendance is recommended, but not mandatory

Course books

Simon Benninga and Tal Mofkadi. Financial Modeling, Fifth Edition. MIT Press

Assessment

Written and subsequent oral examination. The examination is held on the same day. The written examination consists of five theoretical open questions. The time available to complete the test is one hour. After the written test has been corrected, any oral and recorded examinations take place.

The evaluation criteria are: the level of mastery of the theoretical knowledge, graphic, mathematical and analytical tools used; the degree of articulation of the answer; the degree of adequacy of the explanation; the degree of accuracy of the graphic and analytical analysis.

Disability and Specific Learning Disorders (SLD)

Students who have registered their disability certification or SLD certification with the Inclusion and Right to Study Office can request to use conceptual maps (for keywords) during exams.

To this end, it is necessary to send the maps, two weeks before the exam date, to the course instructor, who will verify their compliance with the university guidelines and may request modifications.

Teaching

Same program of the attending students.

Attendance

Same program of the attending students.

Course books

Same program of the attending students.

Assessment

Same modalities of the attending students.

Disability and Specific Learning Disorders (SLD)

Students who have registered their disability certification or SLD certification with the Inclusion and Right to Study Office can request to use conceptual maps (for keywords) during exams.

To this end, it is necessary to send the maps, two weeks before the exam date, to the course instructor, who will verify their compliance with the university guidelines and may request modifications.

Erasmus students can request to sit the final exam in English with an alternative bibliography to be defined with the professor.