good morning good afternoon everybody I'm a goon and ensign Gupta from Bartman iit kanpur so the course for the hen beetle MOOC which I will be delivering to all of you would be related to quantitative finance so before i start off with the program i will just discuss the syllabus and the syllabus would basically have two big components one is the tool or the set of tools and techniques which you will study plus the application which will be there in the area of Finance so that's why the first part which is the tools would be the quantitative techniques like mathematical techniques statistical techniques simulation techniques computational techniques and how those techniques and tools are used in finance starting from say for example trying to find all the portfolio analysis doing the derivative pricing trying to find out the stock prices trying to find the risk so on and so forth so before we start off the course today I'll just go very briefly through the syllabus and obviously you can have a look at the reference list I am NOT saying the difference this is exhaustive there are a huge amount of our materials in the net in the in in different libraries but this is a small set based on which it definitely if you do on an exhaustive search you will definitely find some relevant materials so the first part of the syllabus is basically the areas which we'll cover so it will basically go cover not in depth it will be more of the application side related to interest rates net present values how net present values are utilized to find out continuous compounding concepts how they are used to find out the different portfolios balance the portfolio's try to find out the internal rate of returns and how when you are trying to balance two different portfolios trying to balance two different stocks trying to balance two different investment purposes considering where the stocks are there whether options are there how the interest rate can be used how interest rates can be used to minimize the risk also will consider bonds the yields of the bonds the duration the immunizations house techniques are used again as I'm mentioning it will be more of the tools and the final results rather than the proofs will consider as we discussed the concept of time-series as we discussed the concept of of econometric techniques of linear regression multiple linear regression we will try to analyze how capital asset pricing he's used how the market line is drawn how you utilize the market line to find all the prices the beta is what his betas will consider that also in detail then we will consider the factor models if there are single factors if there are multiple factors how they can be modeled in line with the markets and try to find out what are the existing concepts assumptions of arbitrage pricing theory which is apt we will consider optimal portfolios how they are formed and how you find out the risk aversion the pricing of the stocks are born of the stocks what are the different type of distribution we consider whether its normal non normal whether you consider extreme value distribution to be true what are the different concepts of probability theory we use we'll come to that later on also we will consider in a very big way the areas of derivatives derivatives in a very simple ways that derive products so derived products can be forward futures options different Tower of exotic options different type of traps how they are used in order to basically minimize that is so our main concern will be to minimize the risk rather than trying to understand that how you try to maximize your profit because risk as a word is very important in finance and generally in quantitative finance how we try to basically find it out we'll come to that we'll consider different a multi period securities risk analysis how they are done value of the risk conditional value of risk and we'll also consider later on the copula theory market risk operational risk so on and so forth now the tools and techniques which we'll study so it would be a swap between the techniques and and the way we try to utilize the techniques in the area of quantitative finance as such so I'll be using the the concept of quantity finance in a very broad sense so we'll consider very simply in the concept of microeconomic Theory how demand and supply basically gives you the optimal price and optimal quantity because prices once you find out it is very important how you find out the returns because given a price you want to find out what is the positive and negative returns based on which you can find out your actual prices based on which you can optimize your portfolio will consider different type of probability theory law of large numbers why law of large numbers are important what is the concept of different above based theorem how conditional probabilities are important we'll consider those things also in in depth when you go into the areas of say for example Coppola theory and and portfolio optimization we'll consider different type of probability distributions like if normally doesn't hold and if normal it doesn't hold then obviously we'll try to basically make a simile that what are the concept of utility theories which are are useful in those case will consider how how other type of distributions how extreme value theory how Gumbel distribution then different above Pareto distributions are utilized in the area of portfolio and risk management we'll try to find out the different techniques of estimation how the best estimates are found or given a small data sets in finance we'll solve simple examples then we'll consider that in the in the area of options when you go into the concept of trying to find out the option pricing how stochastic processes are used what are the random works how random works can be utilized to find out the prices how deveneux bucks are also utilized in different of simulation techniques we'll come to that later on and what is the concept of market martingales what are the properties of articles they are used what is the ergodic theory and how they're utilized in finance we'll go through that in the area of mathematical methods like what are what we mean by a function multivariate function how different type of numerical techniques rangiku tamatha newton-raphson method and how they are used to find out different optimum solution or suboptimal solution considering the problems cannot be soaring aney general known techniques we'll go through that those also in the area of operation research we will basically go through initially the mark of its principle theory and why he came up with with that word based on which you can find out the optimum portfolio will concerned and that also will considered if and techniques of optimization what is Lagrangian how lagrangian helps us in trying to formalize and solve problems very simply we'll consider that also we will consider later on and has how as time changes how your portfolio can be readjust is depending on our time so as prices are changing as you're buying and selling stocks we'll consider those very simple techniques of dynamic programming stochastic programming where the inputs are all non deterministic and recently in in the last five six years or ten years the concept of reliability Theory how they are used in in finance mainly in the area of portfolio optimization we'll consider those also how robust optimization are used we consider that also so and as we come to the economic method time series method how time series economic methods would be utilized to find you use the different techniques of eager ARIMA model guards methods how they are used to find out the prices as well as try to basically find on the optimum portfolio how you try to minimize that is how you try to find out the best estimate of the prices based on which you can if you go back later on we will see that how different techniques in econometrics and time series can be used to find out the optimum prices in the in the kappa model in the apt model with very simple examples and then later on given different type of of data sets we will see that how different concept of Monte Carlo simulation then MCMC methods and different above computational techniques can be you placed in the idea of trying to find out different portfolios different above option pricing and so on and so forth so this is in a very broad net Man nutshell what are the things we will cover obviously there are many details as we proceed for the interested readers we will just consider that what are the different textbooks which are available now considering the the huge amount of information which is available in a net so I I personally think that if you somebody does a very good goggle search related to these techniques obviously that a huge amount of information but considering that some focuses should be there so I've just listed few of the books which are easily available available in any library or they can be purchased from from the market in Indian Edition now one of the good books in the area at least to give a trim any information about how markets operate is the book by Prasanna Chandra then a very good book by Operation resource mathematician is by David G luan burger which is the second one then when we come into options features how you find out the prices the option features in a very rudimentary way considering the whole gamut of things which will consider is very big is the fourth one which is John C halls book and obviously there are Indian additions to that a good even though it's a little bit old book is the first one which is Modern Portfolio theory then we'll have generally discussions about William Chows book where it considers in a very qualitative way and in a very nice and exhaustive manner that what are the different type of concept options what are the different type of definitions they have then new books which are available in the market obviously in the foreign market is the book bike by quantity financed by Stephen blight and another book which has a very specific utilization of the statistic methods and I found that book to be good without being very rigorous one one of the book which is the eighth one which is basically statistics and finance an introduction by David Rupert so this is a small set I am sure the the students once they proceed they are following the nodes they are following the lectures they do their own search I'm sure these apart from this book there will be lot of other informations which they can utilize in order to at least get themselves well accustomed to the different concepts of quantitative finance how they are used in the daily market and and how they can be basically utilized in different of practical applications now having said that I would like to basically pinpoint two important points point number one this is not a course for people who want to basically invest in the stock market that's a different ballgame because for that we generally consider different about fundamental analysis technical analysis which need to be studied by by people so you have to have some informations about how the stocks are doing what are the shares are doing what is the profit and loss account what are the balance sheet what are the business areas how the stocks are doing so we would not discuss that it's basically giving you an overview we won't be going to that depth point number two is that if you go to the introduction lecture that why this course is important I did mention that there's a huge dearth of good faculty members and for students who are really interested to pick up these nuances of quantitative finance so I we suppose that this course would be a good starting point for the kind students who are really interested in the area of quantitative finance now having said that so far far for us through the syllabus will first discuss in a very brief method and and and we'll do a very brief analysis that what are the techniques in economics and and in general utility theory how demand-supply are utilized in order to basically understand the overall environment it's not that we have to basically go through each and every techniques each and every method but will you basically give a good understanding or overall concepts as that once you go into the nuances of quantitative finance it will give you a good feel that given the premium background people will be able to understand the quantity finance technique as a as a as a method so with this I'll just close the syllabus related PPT slide and then I will start off with a basic introduction which is will be the first so-called set of lectures which will basically kick start the whole process in the area of quantity difference so as as I proceed obviously they would be they would I will be scribbling on on the on the PPD slides that what are the different type of equations which can be derived so my methodology of unev teaching would be more PPT based and lectures and obviously as we proceed they would be cases where I may try to use the board or may try to use the the computer in order to highlight all the few of the facts and later on if required I will log on to few of the websites which will give you a lot of information that how the data can be downloaded or who are the good people who work in the area of quantity finance what are the different type of data sets which I use what are the different I was software as here used so I'm not going to come into the details immediately but as it proceeds as I find the need we will definitely discuss about them