AC 4204 - Investment and Financial Markets

4 lecture hours 0 lab hours 4 credits

Course Description
This is the first of the sequence of two courses to prepare our students for Exam IFM of the Society of Actuaries. This course is to develop the student’s knowledge of certain actuarial models and the application of those models to insurance and other financial risks. (prereq: AC 3303)

Course Learning Outcomes
Upon successful completion of this course, the student will be able to:

Understand the assumptions of mean-variance portfolio theory and its principal results
Understand different methods for the valuation of asset portfolios and explain their appropriateness in different situations
Understand the notion of efficient markets and explain why market participants may make irrational systematic errors, leading to market inefficiencies
Understand different ways to measure investment risk and conduct project analysis using advanced techniques used in capital budgeting
Understand the factors that a company has to consider when deciding its capital structure
Understand how forward contracts and futures contracts can be used in conjunction with the underlying asset in a risk management context
Understand how call options and put options can be used in conjunction with the underlying asset inn a risk management context

Prerequisites by Topic

Calculus
Probability
Basic corporate finance
Interest theory

Course Topics

Mean-variance portfolio theory
Asset pricing models
Market efficiency and behavioral finance
Investment risk and project analysis
Capital structure
Introductory derivatives-forwards and futures
General properties of options

Coordinator
Dr. Brandon Reid

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AC 4204 - Investment and Financial Markets