Knowledge and understanding:
The aim of the course is to describe the main features of the basic quantitative models and methods for the valuation of:
- Financial securities and credit instruments;
- Future cash flows (originated by financial securities, economic investments, enterprises, and so on);
- Structure of returns and prices of fixed-income securities.
It will also be discussed how to use such models and methods.
The models dealt with are deterministic. Some discussion about models dealing with investments bearing financial risks is developed, with particular regard to financial immunization in respect of interest rate risk.
At the end of the course the student should be able to perform the basic quantitative assessment of financial securities and credit instruments, to compare prices of fixed-income securities and to describe a problem of choice based on financial criteria.
Applying knowledge and understanding:
The student will be trained in performing the basic quantitative assessments of financial securities and credit instruments, comparing market prices of fixed-income securities, setting a financial valuation problem or taking a decision based on financial criteria.
The course aims at developing the financial sensibility and the ability for critical analysis which are expected from a student graduated in the economic area, and who is employed in the financial sector, or deals with the financial management of commercial or industrial enterprises.
The student is educated in the use of the basic financial-quantitative language. He/she is able to interpret (and, if necessary, validate by developing autonomously appropriate calculations) the output of basic financial packages, as well as to describe them to third parties (such as: users of financial services). Moreover, he/she is able to understand and describe the basic quantitative financial valuation criteria, commonly used for financial decision-making.
The student develops the ability to understand the financial problems and to select the most appropriate quantitative valuation models. The student learns to adopt deterministic quantitative models, also in a stochastic framework. In this latter respect, she understands which simplifications must be assumed in order to obtain a quick solution and how to interpret the main findings in respect of such simplifications.