Elementary Finance

Cours de finance élémentaire, en anglais.

• Introduction
• Difference between accounting and finance
• What is an investment?
• Physical and financial investments
• What is a financial product?
• Stocks and bonds
• The modelling of time

Elementary probability theory (part 1)

• The modelling of uncertain future
• Random experiment, random variable, stability of long term results
• The concept of probabilities
• Equiprobabilities
• Physical probabilities
• Theoretical probabilities
• Law of large numbers
• Simulations with a spreadsheet
• Distribution or density of a random variable
• Expectation of a random variable
• Variance and standard deviation of a random variable
• Gaussian random variables

Elementary probability theory (part 2)

• Four situations involving random variables
• Profitability as a random variable
• The risk of a security
• Investors and gamblers
• Utility of money: Saint Petersburg paradox

• Risk aversion

Chapter 4

• discounting
• opportunity cost of capital
• profitability and generalized profitability
• internal rate of return

Chapter 5

• evaluating investments
• the role of cost accounting
• example 1example 2example 3

Chapter6

• bonds: new bonds
• bonds: second hand bonds

Chapter 7

• what is advanced finance
• continuous time
• option pricing
• no arbitrage principle revisited
• Black & Scholes formula