Financial Maths (FICO, 1st curse)

The objective of this course is for students to understand the principles that govern the price formation process of both financial and real assets, as well as to become familiar with and apply the basic techniques of asset valuation. To achieve this objective, students must acquire a set of knowledge, skills, and attitudes. In terms of knowledge, by the end of the course, students will be able to: - Summarize how financial markets operate and understand the decisions faced by participants in these markets. - Understand the concepts of risk and return associated with the cash flows generated by assets. - Apply the concept of the time value of money to calculate discounted values. - Recognize the different types of derivative instruments and their use in risk management. - Analyze the functioning of financial markets and identify the imperfections that hinder the practical application of valuation models and allow agents to earn abnormal returns.

Topic 1: Review of Basic Financial Mathematics Formulas Topic 2: Introduction to Financial Markets Topic 3: Investment Valuation Topic 4: Fixed-Income Assets Topic 5: Interest Rate Determination and Risk Management in Fixed Income Topic 6: Return and Risk Topic 7: Portfolio Management: Mean-Variance Model Topic 8: Capital Asset Pricing Model (CAPM) Topic 9: Factor Models and Arbitrage Pricing Theory (APT) Topic 10: Derivative Assets: Options and Futures Topic 11: Introduction to Derivative Asset Valuation

Teaching methodology will be as follows: -Each topic or sub topic is presented by the professor in a theory session. After the theory session the students have to study the materials, do complementary readings and work on the relevant problem sets. These problem sets and questions from the students are solved in the next practice session. The problem sets have to be solved at home prior to the practice session. -The course material for each topic (slides that will be used in theory sessions and problem sets to be solved in practice sessions) is provided in advance through the intranet in Aula Global 2. -Each teacher has scheduled weekly office hours that the students can use to obtain extra help.