All readings are required unless they are indicated as “Optional”. Short quizzes will be administered on each of the dates indicated for required readings.

We will follow the reading schedule given below:



August 23

1. Optimization (chapter 2 from Managerial Economics, by W. Bruce Allen, Neil Doherty, Keith Weigelt, and Edwin Mansfield, 6th edition (2005))
2. How long does it take to double (triple/quadruple/n-tuple) your money?, by James R. Garven

August 28

1. The New Religion of Risk Management, by Peter Bernstein
2. Normal and standard normal distribution, by James R. Garven

September 4

1. Supply of Insurance, by Greg Niehaus, Univ. of South Carolina
2. Basic Economics: How Individuals Deal with Risk (Doherty, Chapter 2)
3. Introduction to Expected Utility and Risk Preferences, by James R. Garven

September 13

1. Expected Utility, Mean Variance, and Stochastic Dominance, by James R. Garven
2. Stochastic Dominance and Expected Utility (Optional), by James R. Garven
3. A Reexamination of the Relationship Between Preferences and Moment Orderings by Rational Risk Averse Investors (Optional), by Patrick L. Brockett and James R. Garven

September 20

The Demand for Insurance, by James R. Garven

September 25

Finance 4335 course synopsis for Midterm Exam 1 (optional), by James R. Garven

October 2

1. Moral Hazard & Adverse Selection (Doherty, Chapter 3)
2. Moral Hazard & Adverse Selection Synopsis, by James R. Garven
3. Moral Hazard and Insurance, by James R. Garven

October 11

1. Portfolio and Capital Market Theory, by James R. Garven
2. Portfolio Theory and Risk Management (Optional; Doherty, Chapter 4)
3. Modern portfolio theory (Optional; source: Wikipedia)
4. Capital Market Theory (Optional; Doherty, Chapter 5)
5. Capital asset pricing model (Optional; source: Wikipedia)

October 18

1. Derivatives and Options (Doherty, Chapter 6)
2. Binomial Option Pricing Model (single-period), by James R. Garven
3. A Simple Model of a Financial Market (Optional), by James R. Garven

November 13

1. Why is Risk Costly to Firms? (Doherty, Chapter 7)
2. The Modigliani-Miller Theorems and Corporate Risk Management Theory, by James R. Garven
3. How Insurance Solves the Underinvestment Problem, by James R. Garven
4. A Framework for Risk Management, by Ken Froot, David Scharfstein and Jeremy Stein