The course begins with a general description of financial markets and their structure. Furthermore, the course deals with theories for pricing financial assets on well-developed capital markets. The basis for pricing models is portfolio theory, which is used for derivation of so-called optimal portfolios, that is, how an investor should combine a large number of financial assets to obtain the best possible balance between return and risk. The portfolio models covered are CAPM and APT and their empirical equivalents Single Index and Multi Index models. Other areas covered in the course are theories of effective markets, bond pricing, and the theoretical valuation of European and American options. The course also shows the price limits within which option prices must be available during the term of the option, assuming the market is arbitrage free.
Economics (1-30) 30 credits.
Available for exchange students. Limited numbers of seats.
Language of instruction:
Teaching is in English.