Axioms of utility theory and the expected utility theorem. Measures of investment risk and their
computations. Mean-Variance portfolio theory; the minimum variance portfolio and the capital market
line. Single and multifactor models of asset returns; their results and implications and their limitations.
Efficient Markets Hypothesis: theory, tests and empirical evidence. Stochastic models of the behaviour of
security prices. Main concepts of Brownian motion. Option pricing models; Valuation methods; Models
of the term structure of interest rates. Understanding simple models for assessing credit risk.
