API-141: Finance

This course provides a general survey of financial concepts, techniques, and instruments. It emphasizes an intuitive, logically rigorous understanding of the theory and practice of financial markets and institutions, illustrating the concepts through examples and cases drawn from diverse settings. The topics covered in this course include time value, the principle of arbitrage, diversification, the trade-off between risk and return, pricing of stocks and bonds, market efficiency, the capital asset pricing model, the term structure of interest rates, derivative securities such as forwards, futures, and options, the use of derivatives for hedging, real options, and risk management. Case discussions illustrate a wide range of applications including yield curves, raising finance, public pension funds, rate of return regulation, investment funds, currency risk management, weather micro-insurance, privatization for development, banks and deposit insurance, and housing finance and the subprime crisis.