Introduction to Financial Engineering & Risk Management (Columbia University)

Colleagues, this Introduction to Financial Engineering and Risk Management program from Columbia University is part of the Financial Engineering and Risk Management Specialization provides an introduction to fixed income securities, derivatives and the respective pricing models. We will introduce present value (PV) computation on fixed income securities in an arbitrage free setting, followed by a brief discussion on term structure of interest rates. In the third module, learners will engage with swaps and options, and price them using the 1-period Binomial Model. The final module focuses on option pricing in a multi-period setting, using the Binomial and the Black-Scholes Models. Acquire high-demand skills in Derivatives, Swaps and Options, Fixed Income, Binomial Distribution and Black Scholes model.  Training modules include: 1) Welcome to Financial Engineering and Risk Management; 2) Mathematical Foundations - introduce probabilities and optimization. The theory of probability is the mathematical language to characterize uncertainties, e.g. how to describe the chances that the price of a particular stock will go up tomorrow. To make things precise, we need probabilities - financial engineers apply probabilistic models to capture the regularities of financial products, and apply optimization techniques to optimize their strategies; 3) Introduction to Basic Fixed Income Securities - principles of pricing. In financial markets, given a financial product, how do we calculate its prices? These pricing principles will serve as the cornerstone of our future modules; 4) Introduction to Derivative Securities - financial products that derive their value from some underlying assets, such as interest rates or stocks. The prosperity of modern financial markets is due in large part to the wide variety of derivative securities on the markets such as forwards, futures, swaps, and options as we will introduce in this module; 5) Option Pricing in the Multi-Period Binomial Model - extend from the 1-period binomial model to the multi-period binomial model. Multi-period binomial model is nothing but stacking multiple 1-period binomial models together, cover more advanced pricing models such as the Black Scholes model. We will see how the Black Scholes model is a natural extension of the multi-period binomial model and is widely applicable in practice. 

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Much career success, Lawrence E. Wilson - Financial Certification Academy