Short Courses: Teaching Statistics in Finance

The Centre for Academic Practice at Nottingham Trent University played host on 10 May to a short course on the Teaching of Statistics in Finance, aimed primarily at lecturers in HE…The course began with a run-through of some fundamental ideas in Finance, including compounding interest, present and future values, debt/loan repayment and cash flows. No student of the subject is likely to progress far without these key ideas firmly grasped, so dwelling a little on these basic concepts is unlikely to be time wasted when teaching the material to undergraduates. Professor Lawrance then progressed to what was his main subject for the day, the analysis of financial portfolios, a topic of inherent interest to everyone since we all have a ‘portfolio’ of some description (cash stashed under the mattress being of the ‘no risk, no return’ variety, for instance). The key problems here are essentially of an optimisational ilk, the aim essentially being to maximise expected return for a given risk level, and are interesting and accessible enough to provide an enjoyable, well-motivated area for final year study, incorporating some nice Mathematics on the way to the finding of the hyperbolic curves which comprise the famous Markowitz efficient frontier solution. Around half of the day was spent on portfolio analysis, allowing for a reasonably thorough treatment….