84560 - Financial Instruments

Learning outcomes

The goal of theis course is to give students theoretical knowledge and skills related to financial investments. Studets will learn how to evaluate financial instruments using the most frequently used evaluation models from modern financial theory, and how these financial instruments are traded on financial markets. This is part of the job of a financial analyst.

Course contents

1. The main fixed income markets, including the repo market;
2. The notion of discounts, interest rates, the term structure of interest rates as well as the basic bond pricing formula, and the methodologies for extracting discounts from observable bond prices;
3. The basics of risk management: Yield curve calculus including duration and convexity; its use to design hedging strategies, and in asset-liability management;
4. Basic interest rate derivatives, such as forwards and swaps, and the use of derivative contracts for risk-management strategies;
5. The impact that monetary policy has on interest rates, and Central Banks’ activities during the financial crisis;

6. Stocks: The Capital Asset Pricing Model

7. Multi index models

8. Arbitrage Pricing Theory

9. Option pricing

Readings/Bibliography

Bodie, Kane e Marcus, Investment and Portfolio Management, McGraw Hill, 2013

Elton e Gruber, Modern Portfolio Theory and Investment Analysis, Wiley, 2012

Teaching methods

Lectures in class, discussion of financial events

Assessment methods

written exam

Teaching tools

Slides, PC, Websites of financial press and of Central Banks

Use of the IOL platform:

https://iol.unibo.it/course/view.php?id=49448

Links to further information

https://iol.unibo.it/course/view.php?id=49448

Office hours

See the website of Gabriella Chiesa

See the website of Gabriele Camera