5810806: C21_Risk Management and Financial Decision Making (VT IFS)

Qualifications

• • understand the most important concepts of financial risk
  • know why and where financial risks matter
  • understand the logic of the risk management process
  • know the standard types of financial derivatives and assumptions behind their valuation
  • describe pros and cons of different types of derivatives
  • know the most prominent decision theories
  • understand how rational solutions may be achieved by using classical decision models
  • understand the differences between decision under certainty, risk and ignorance
  • know different levels of market efficiency and their implications
  • understand how information is processed on financial markets
  • solve decision problems by using DT models and methods.
  • find the strategic aspect of a problem and transform it into a simplified problem.
  • can explain non-cooperative game theory
  • analyze decision situations.
  • evaluate Investments with EUT, MV and PT, explain and interpret the assumptions of these methods.
• • select and apply methods for identifying risks
  • select and apply methods for measuring risks
  • select and apply methods for managing risks
  • devise suitable hedging strategies using derivatives
  • select methods for risk communication
  • know methods in decision theory
  • know key concepts of experimental research approaches to test market and trader behavior
  • use methods and models on unknown decision situations.
  • calculate optimal solutions and equilibria
  • compare different methods for measuring and controlling risk and uncertainty in decision processes
  • evaluate decision methods in mini cases and find appropriate models for solving typical problems
  • are able to identify Nash Equilibria in simple Prisoner's Dilemma settings
• • pitch solutions to fellow students
  • argue in favor of and against candidate solutions
  • defend their stance in discussions
  • understand and critically discuss the arguments of fellow students.
• • repeat the contents of lectures and exercises in a self-organized way
  • assess their own learning progress during lectures
  • identify their own strengths and weaknesses
  • tolerate different opinions and working styles
  • listen carefully, read and repeat, practice until they understand the logic and mathematics behind models
  • work together and motivate other students who tend to give up as a reaction to the difficulty of mathematical problems
• • use standard software for valuing financial derivatives