As you prepare for next Thursday’s midterm exam review session, please take the time to work through the sample exam, and also devote some time reviewing Midterm 2 exam topics, which include insurance economics, asymmetric information, portfolio theory, and capital market theory.
Also in the Finance 4335 Media Gallery on Canvas, I have posted a recording entitled “Finance 4335 Review of concepts covered February 2-9”. This recording comprises the first 26 minutes of Thursday’s class, cut short, of course, by the power outage. In this video, I review concepts covered in the February 2-9 asynchronous recordings which also appear as part of the Finance 4335 Media Gallery on Canvas; particularly, the so-called “exact” and Arrow-Pratt (“approximate”) methods for calculating risk premiums. The class problem and solutions related to these topics are available at http://risk.garven.com/2021/02/13/risk-aversion-class-problem-solutions/.
Finance 4335 (Risk Management) will meet synchronously tomorrow via Zoom for our regularly scheduled 2-3:15 pm class session. We’ll devote our attention to a (very) brief review of the expected utility model, and devote most of our time to a discussion of the Decision Making under Risk and Uncertainty, part 3 lecture note, which, among other things, considers broader measures of risk beyond variance.
If you haven’t already watched the February 2nd, 4th, and 9th lectures that are available in the Media Gallery on Canvas, be sure to do so prior to tomorrow’s class. Tomorrow’s lecture topic builds on the foundational principles set forth in those lectures, so you will get much more out of tomorrow’s class meeting if you are already familiar with the concepts covered there.
One final note – The due date for Problem Set 3 was 2/11; it is now 2/16.
Even though we did not meet synchronously on either Tuesday, Feb. 2 or Thursday, February 4, these two videos fully cover the “Decision Making under Risk and Uncertainty, part 1” lecture note scheduled for this week in Finance 4335. Your assignment is to watch both of these videos before Tuesday, February 9; this way, you will be completely up to speed and prepared to tackle the “Decision Making under Risk and Uncertainty, part 2” lecture that I have scheduled for February 9.
At any point in time this semester, you can make sure that you are on track with Finance 4335 assignments by monitoring due dates on Canvas and on the course website. Links for future class meetings, quizzes, problem sets, and exams appear on the Canvas “To Do” list. Links for readings (along with their due dates) appear on http://fin4335.garven.com/readings/, and links for problem sets (along with their due dates) appear on http://fin4335.garven.com/problem-sets/. In the case of assigned readings, students are required to complete a short (10-minute) readings quiz prior to the start of class for each reading assignment due date; the window for completing this task begins at 1:30 p.m. CT the day before the reading assignment is due.
There is a section in the assigned “Optimization” reading due Thursday, January 21 on pp. 74-76 entitled “Lagrangian Multipliers” which (as noted in footnote 9 of that reading) may be skipped without loss of continuity. The primary purpose of this chapter is to re-acquaint students with basic calculus and how to use calculus to solve so-called optimization problems. Since the course only requires solving unconstrained optimization problems, there’s no need for Lagrangian multipliers.
A course blog has been established for Finance 4335 at the address http://risk.garven.com; it is also linked from the “Course Blog” button located on the course website. This resource provides a convenient means for Dr. Garven to distribute important announcements outside of class. Topics covered on the course blog typically include things like changes in the course schedule, clarifications, and hints concerning problem sets, information about upcoming exams, announcements concerning extra credit opportunities, and short blurbs showing how current events relate to many of the topics covered in Finance 4335.
All students enrolled in Finance 4335 are required to subscribe to the course blog via email.Students may also follow the course blog on Facebook or Twitter but are not required to do so.
Email Subscription Instructions:
In order to subscribe to the course blog via email, go to http://risk.garven.com and enter your email address in the form provided on the right-hand side of that webpage:
After clicking “Subscribe”, the following information will appear on the screen:
Next, check for an email from “Risk Management Blog <firstname.lastname@example.org> ”:
Next, simply click the “Confirm Follow” button. This will cause you to receive the following email:
From that point forward, whenever I post to the course blog, you will immediately receive a nicely formatted version of the blog posting via email.