I. INTRODUCTION AND REVIEW OF PREREQUISITE TOPICS
All students enrolled in Economics of Derivatives should ensure that they have adequate preparation in introductory mathematics, particularly matrix mathematics and calculus, including differential and integral calculus. A review of the basic mathematics, including exercises, needed for this course is available in pdf format. Students should make certain that they are comfortable with the material in this review before the end of the first week of class. If a student feels unready to handle mathematics at this level and still wishes to complete this course, even more basic reading material in math follows below. A discussion for using a spreadsheet for multiplying and inverting matrices is available here.

If the review above for this course seems to advanced for you, consider starting with a more elementary review of prerequisite very basic quantitative material below:

2   Review of Elementary Mathematics: Functions and Operations
    2.A  Introduction
    2.B  Variables, Equations and Inequalities
    2.C  Exponents
          Application 2.1  Interest and Future Value
    2.D  Order of Arithmetic Operations and Rules of Algebra
          Application 2.2 Initial Deposit Amounts
    2.E The Number e
    2.F  Logarithms
          Application 2.3  Time Needed to Double One’s Money
    2.G  Subscripts
    2.H  Summations
          Application 2.4  Mean Values
    2.I Double Summations
    2.J   Products
          Application 2.5  Geometric Mean Return
          Application 2.6  The Term Structure of Interest Rates
    2.K  Factorial Products
          Application 2.7  Deriving the Number e
    2.L  Permutations and Combinations
          Exercises
 Appendix 2.A An Introduction to the Excel Spreadsheet 

3   Review of Elementary Mathematics: Algebra and Solving Equations
    3.A  Algebraic Manipulations
          Application 3.1  Purchase Power Parity
          Application 3.2  Finding Break-Even Production Levels
          Application 3.3  Spot and Forward Interest Rates
    3.B The Quadratic Formula
          Application 3.4  Finding Breakeven Production Levels
          Application 3.5  Finding the Perfectly Hedged Portfolio
    3.C  Solving Systems of Equations Containing Multiple Variables
          Application 3.6  Pricing Factors
          Application 3.7  External Financing Needs
    3.D  Geometric Expansions
          Application 3.8  Money Multipliers
    3.E  Functions and Graphs
          Application 3.9  Utility of Wealth
          Exercises
 Appendix 3.A  Solving Systems of Equations on a Spreadsheet

440.646: Economics of Derivatives

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