The course aims to achieve two main objectives: to analyze the essential theoretical and empirical aspects necessary for a proper interpretation of the structure and functioning of the capital market, and to provide the fundamental principles for understanding the valuation and the management of financial instruments and portfolios of financial instruments. By the end of the course, students will be able to: identify and assess the primary financial instruments (stocks, bonds, and derivatives) with respect to their risk and return profiles; comprehend the principles of portfolio diversification and the methodologies for constructing and managing portfolios. Additionally, students will acquire knowledge related to the efficiency of financial markets and their organizational structure.
I PART: Price, return and risk of financial instruments.
- The idea and the logic behind price, return and risk calculation;
- Price, return, liquidity and risk for bonds;
- Price, return and risk for stocks;
- The term structure of interest rates;
- The efficient frontier and portfolio construction.
II PART: Bond and Stock Portfolio management.
- Benchmark construction and uses;
- Benchmarking or Indexing;
- Active Strategies;
-Fama and French Model
- Immunization; - Return Maximisation
– Ex post performance measurement
III PART: Structure and efficiency of capital markets - The definition of financial market efficiency - Financial Markets structure
IV PART: Derivatives Instruments.
