HNRS 132-02: Mathematics of Risk

We are used to making decisions based on complete knowledge. A problem such as finding the future value of a savings account that earns 2% interest is so simple that we can program a computer to do it.  The world is often not so straightforward. If asked to find the value of Apple stock one year from today, any reasoning analyst would respond that “it depends” or with words to that effect.

The “it depends” answer is in response to uncertainty. No one knows how the market will respond over the next year.  We are often called upon to make decisions in spite of this uncertainty. We still have to decide whether or not we will buy 100 shares of Apple stock. In such cases our behavior involves risk.

In Mathematics of Risk, we study the mathematical tools that handle the assessment and analysis of risk. The course will start as most elementary probability courses do with simple calculations of probability. For example, we will show why it is probabilistically advantageous to switch doors in the Monty Hall problem. Once the basics are learned, we will spend most of our time on risk models of financial markets.

Term: Spring 2009

Credits: 4

Fulfills: GE Requirement in Quantitative Studies (Q)

Cross-listed: MATH 200 (must register under HNRS 132-02)

Meeting times: 19:30-20:20 TR

Instructor: Michael Westmoreland