Fundamentals of Finance

financial products (stocks, bonds, derivatives, etc.) and financial markets (money markets and capital markets); organisation of exchanges (basics); types of stocks, ratios (e.g. price-earnings-ratio, book-to-market ratio), dividend discount model; portfolio theory and CAPM / APT, sensitivity measures for stocks (beta); derivatives on stocks and stock indices (forward/futures, call and put options), Valuation of forwards on stocks and stock indices; types of bonds (issuer, currency, rights of cancellation, fixed coupon vs. FRNs); spot rates, forward rates, yield to maturity, spreads; valuation of riskless bonds and sensitivity measures (modified duration, Dollar duration, Fisher/Weil duration, basis point value, modified convexity, dollar convexity, key rate duration, key rate convexity), derivatives on bonds and interest rates (FRAs, interest rate swaps, forwards/futures on bonds and interest rates, calls and puts on bonds and interest rates); valuation of FRAs, interest rate swaps and forwards on bonds and interest rates

Mode of delivery




Recommended or required reading and other learning resources/tools

Brealey, R., Myers, S., 2008, Principles of Corporate Finance, 9th ed., McGraw-Hill

Planned learning activities and teaching methods

Integrated class

Assessment methods and criteria

This course is based on continuous assessment (30%) and a written final exam (70%). For the continuous assessment (e.g. assignments, presentations, in-class contributions, quizzes) the rules are outlined in the syllabus of each lecturer.

Prerequisites and co-requisites

Basics of Finance, Mathematics and Statistics


Degree programme

Quantitative Asset and Risk Management (Master)



ECTS Credits


Language of instruction




Academic year



1 WS



Learning outcome

After the successful completion of the course students are able to describe the most important financial products and financial markets. The students can apply the models of basic portfolio theory and outline advantages and disadvantages of these models. Furthermore the students are able to calculate various key figures for stocks, bonds and derivatives and interpret them.

Course code