Reading guide WEEK 2
Recap material
This material is for students who do not have a lot of background in Finance and need to
familiarize themselves with basic financial concepts. Students who previously followed courses
in Finance can skim-read these sections as a refresher. If anything in the textbook or slides looks
unfamiliar, check whether you find a knowledge clip on that topic on Canvas. The knowledge clips
are taken from the courses Finance II (EBE) and Financial Modelling and Derivatives (IBA) and are
a great way to recap the knowledge that we require for this course.
•
•
•
Textbook Bodie Kane Marcus, Investments, 12 edition:
o Chapters 1, 3, and 4 (without 4.4, 4.5, 4.8)
o Chapter 2: only intro box and summary (at the end).
o Chapter 7, Appendix B: Review of Portfolio Statistics
Slides:
o Refresher slides posted on Canvas in the material for Week 1. (You can skip the
slides on bonds and options for this week.)
Knowledge clips (recap):
o All that are posted for Week 1 on Canvas
Core material
This material will contain the bulk of the exam questions, quiz questions, and knowledge for the
assignments. With a good command of the core you should be able to pass the course with a
solid grade. Much of the core material in the textbook overlaps with the Recap material above.
We therefore also discuss papers, which extend and apply the textbook knowledge.
•
•
Textbook Bodie Kane Marcus, Investments, 12 edition:
o Chapter 5, 6 (without Appendix A), and 7 (without 7.5)
o Chapter 8: only 8.1, 8.2, and 8.3
Papers:
o F. Holzmeister et al (2020): “What Drives Risk Perception? A Global Survey with
Financial Professionals and Lay People” Management Science. 66(9): focus on risk
perception and less on investment propensity.
o Gigerenzer, G. (2008). Why heuristics work. Perspectives on psychological science,
3(1), 20-29: focus on the first of the examples mentioned in the section “Examples
of heuristics”. OPTIONAL: If you are interested you can also take a look at the
underlying study from DeMiguel et al (RFS, 2009).