040638 EK KFK CF/FD/FM: Principles of Finance
 

Date
Topics
02.10.2012
  Leaflet

Topics:

  • Organisatorical issues
  • Introduction:
    • Financial Systems
    • Key Ideas and Research Methods in Financial Economics
    • A Simple Example: Intertemporal Risk-Sharing
  • Financial Decisions and the Theory of Choice
    • Review: The Axioms of Choice and the Principle of Maximum Utility
03.10.2012
 Problem set 1: problem 1 (download from Moodle) (see also document in folder "Additional notes")

(mark the problem if you have prepared it and you are willing to present it)
Please note that you must not mark problems if you are not present in the course!

Topics:
  • Financial Decisions and the Theory of Choice
    • Review: The Axioms of Choice and the Principle of Maximum Utility
09.10.2012
 Problem set 2: problems 2-3 (download from Moodle) (mark the problems if you have prepared them and you are willing to present them)
Please note that you must not mark problems if you are not present in the course! Topics:
  • Financial Decisions and the Theory of Choice:
    • Intertemporal transfer of funds
    • Hedging risk
10.10.2012
 Problem set 3: problem 6(a) (download from Moodle) Determine the possible payoffs and their probabilities for each urn.
Write these as simple lotteries as in the example of slide set 6, slide 3 (cf. also slide 12).

(You need not mark this problem, but it will be helpful to understand some concepts we will discuss more easily if you prepare it!
Participating the discussion in the course will be taken into consideration for final grading.)

Topics:
  • Decisions under Uncertainty (Risk)
16.10.2012
 Problem set 2: problems 4-5
Problem set 3: problem 7 (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • Decisions under Uncertainty (Risk)
17.10.2012
 Problem set 3: problems 9, 15, 16 (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • Decisions under Uncertainty (Risk)
    • Measures of risk aversion
    • Some remarks in behavioral aspects
23.10.2012
 Problems 8, 10, 11, 12, 13, 14, 17 (Problem sets 3 and 4) (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • Optimal Portfolio Selection and Risk Diversification: Mean-Variance Approach
24.10.2012
 Topics:
  • Optimal Portfolio Selection and Risk Diversification: Mean-Variance Approach
Hint: If you need to review classical portfolio theory, see additional notes and the book of Copeland/Weston/Shastri.
30.10.2012
 Problems 18-21, 24 (Problem set 4 (part 1)) (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • Market Equilibrium in the Mean-Variance Framework: The Capital Asset Pricing Model (CAPM)
31.10.2012
 Problems 25, 26 (Problem set 4 (part 2)) (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • Discussion of the CAPM (cntd')
06.11.2012
 Problems 27-29 (Problem set 5) (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • Some remarks on returns

    end of topics relevant for the midterm exam

  • Two-Period Model: State-Preference Approach
07.11.2012
 Midterm exam

Topics for the exam: slide sets 1-8 including exurses.

13.11.2012
 Problems 30-33 (Problem set 6) (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • Two-Period Model: State-Preference Approach (complete and incomplete markets)
14.11.2012
 Topics:
  • No-Arbitrage Principle and the Theorem of Asset Prices
20.11.2012
 Problems 34-37 (Problem set 6) (mark the problems if you have prepared them and you are willing to present them)
 Topics:
  • No-Arbitrage Principle
  • Consumption Based Asset Pricing Model
21.11.2012
 Problems 38 (Problem set 6)
Solve this problem by using all approaches we discussed in the course.

(mark the problem if you have prepared it and you are willing to present them)

 Topics:
  • Consumption Based Asset Pricing Model
27.11.2012
 Topics:
  • Consumption Based Asset Pricing Model and Financial Markets Equilibria
28.11.2012
 Topics:
  • Pareto Efficiency in Financial Markets Equilbria
Problems 39-42 (Problem set 6)

(mark the problem if you have prepared it and you are willing to present them)
04.12.2012
 Problems 42(f)-(g), 43-52 (Problem set 7/8)

(mark the problem if you have prepared it and you are willing to present them)

Please note that problems we do not discuss on this day will be discussed in Dec 5.
You have to mark them again (only these marks will be relevant).

05.12.2012
 Problems 50-52

(mark the problem if you have prepared it and you are willing to present them)

11.12.2012
 Final exam