The purpose of this course is to introduce the student to the foundations of quantitative analysis of investment alternatives. The techniques emphasize a cash flow approach. The topics include deterministic cash flow analysis (time value of money, present value, internal rate of return, taxes, inflation), fixed income securities, duration and bond portfolio immunization, term structure of interest rates (spot rates, discount factors, forward rates), Fisher-Weill duration and immunization, capital budgeting, dynamic optimization problems, investments under uncertainty, mean-variance portfolio theory, capital asset pricing, and basic options theory. The course attempts to create a link between engineering analysis and business decision-making.
