Financial Engineering & Portfolio Theory -CM2 Actuarial Exam

Section 1 - IntroductionFinancial MarketsWe look at various markets such as the Stock Market, the Bond Market, the Derivative Market as well as Risk markets. Efficient Market HypothesisWe consider the Strong, Semi and Weak form of the Efficient Market Hypothesis as well as the evidence for and against each one. Can you Beat the Market.

We compare the success of Warren Buffet vs the success of John C BogleActive vs Passive StrategiesWe compare two investment philosophies and consider the problems with eachCovid-19 Investment StrategiesI share my own investment strategies before and after Covid-19What Caused the Great RecessionWe look at what caused the global recession in 2008Section 2 - Utility Theory Irrational BehaviourWe play the St Petersburg Paradox and consider if our decisions can be irrationalConsumer Choice TheoryWe look at indifference curves and budget lines to make decisions around bundles. Utility TheoryWe make observations about the utility of money and consider various attitudes towards risk. Axioms of UtilityWe look at Completeness, Transitivity, Continuity and IndependenceExpected Utility TheoryWe consider consumer choice theory with uncertaintyStochastic DominanceWe look at Absolute, First Order and Second Order DominanceSection 3 - Behavioural Economics Behaviour EconomicsHeuristicsFramingHerd InstinctAnchoringMyopic Loss AversionMental AccountingBias - (Self Serving, Confirmation, Availability and Familiarity)Story BelievingHow to Fight IrrationalitySection 4 - Risk MeasuresVariance and Semi VarianceShortfall ProbabilityValue at RiskExpected Shortfall (Tail VaR)Relationship between Risk Measures and Utility FunctionsSection 5 - Mean Variance Portfolio TheoryIntroduction to Portfolio TheoryIntroduction to Mean Variance Portfolio TheoryAssumptionsOpportunity Set & Efficient FrontierDiversification BenefitOptimal PortfolioSection 6 - Capital Asset Pricing Model.