B. Theory of Finance Rigorous treatment of asset pricing theory. The economics of intertemporal choice and choice under uncertainty are developed and applied to financial markets. Theories of asset pricing are covered, including the capital asset pricing model, arbitrage pricing theory, and option pricing theory. Review of probability and statistics followed by either regression theory and application or baysesian decision theory. Regression theory covers the subject through Gauss-Markov theorem.
Course also includes discussion of the theory and application of diagnostic statistical tests.
Study of various problems, such as heteroskedasticity, serial correlation, and non-orthogonal errors. There is considerable emphasis on nested hypothesis testing. Study of various methods of econometric forecasting, including statistical decision theory, Box-Jenkins, adaptive methods, single and simultaneous structural equation models. 273A. Managerial Accounting A course concerned with financial statements that are made available to creditors, stockholders, and other interested parties. The goal is to engender a knowledge of the measurement methods used by accountants and the ability to evaluate these methods.