QUANTITATIVE METHODS AND MODELS FOR FINANCIAL CHOICES

The course Quantitative Methods and Models for Financial Choices is part of the Entrepreneurship track within the Master's Degree in Global Development and Entrepreneurship. It contributes to shaping professionals capable of navigating complex international environments with a strong quantitative and applied foundation.

The course aims to equip students with practical tools to understand, assess, and use financial derivative instruments. Adopting a hands-on, quantitative approach, it explores both speculative uses of derivatives and—more importantly—their role in managing corporate financial risk. Students will learn to design and evaluate hedging and systematic trading strategies, with a constant focus on risk management.

As such, the course builds advanced operational skills that are essential for global entrepreneurs and for those aiming to work in financial markets with solid methods, technological awareness, and a strong focus on risk control.

At the end of the course, students will be able to:
- analyze corporate or financial contexts by identifying relevant exposures to risk factors (price, interest rate, exchange rate, environmental risk);
- evaluate risks and opportunities linked to speculative and hedging strategies;
- apply quantitative models to simulate and compare different risk management solutions;
- design basic systematic trading strategies with an emphasis on risk control;
- interpret the outputs of quantitative models in operational and strategic terms;
- clearly and critically communicate trade-offs between expected return and risk within decision-making contexts.

To successfully follow the course, students are recommended to have:
- basic knowledge of financial mathematics (compound interest, present value, rates of return);
- familiarity with risk/return concepts and the basic functioning of financial markets;
- foundations in descriptive statistics and probability, useful for data analysis and strategy building;
- working proficiency in Excel, at least at an intermediate level (formulas, cell referencing, charts);
- a willingness to engage with specialized software tools, although no prior experience with the platforms used in class is required.

The course covers the following key topics:
- introduction to modern financial markets: market structures, key players, operational approaches and analytical tools. Focus on key financial questions: what to buy, when and why; how to manage risk, return, and liquidity;
- overview of derivative markets: differences between regulated and over-the-counter (OTC) markets; roles of intermediaries, margining, and clearing mechanisms;
- futures contracts: structure, pricing mechanisms, and strategic uses for speculation and hedging;
- financial options: calls, puts, payoff diagrams, and both basic and advanced strategies involving equity, index, and interest rate options;
- combined strategies: spreads, straddles, strangles, collars, covered calls, protective puts, calendar spreads, butterflies, and condors;
- volatility trading and the VIX: tools and strategies for trading implied and expected volatility;
- risk management with derivatives: practical applications to hedge corporate exposures to price, interest rate, currency, and environmental risks;
- introduction to systematic trading: core principles, operational logic, and performance assessment with strong emphasis on risk control;
- exotic options and custom-built solutions: introduction to path-dependent options and structured products; use of OTC markets to design 1-to-1 contracts tailored to specific business needs.

The teaching material provided during the course (slides, exercises, simulations) is sufficient for exam preparation.

For students wishing to explore further, the following (non-mandatory) textbook is recommended:

John C. Hull, Options, Futures, and Other Derivatives, Pearson (latest available edition).

The final grade is based on a written exam, consisting of:
-10 multiple-choice questions, each worth 2 points
- 6 short exercises, each worth 2 points
The maximum achievable score is 32 out of 30. Scores of 31 or higher will be awarded cum laude (honors).

written

The final grade is based on a written exam, consisting of:
-10 multiple-choice questions, each worth 2 points
- 6 short exercises, each worth 2 points
The maximum achievable score is 32 out of 30. Scores of 31 or higher will be awarded cum laude (honors).

The course combines lectures and hands-on activities to bridge theory and real-world application.
Teaching methods include:
- lectures supported by slides;
- use of Interactive Brokers’ Trader Workstation to explore real-time financial markets;
- trading strategy simulations using MetaStock;
- options strategy analysis through Option Net Explorer;
- demonstration of probability-based strategies using Trade AI;
- use of Excel spreadsheets to model, assess, and compare financial strategies.

This subject deals with topics related to the macro-area "Human capital, health, education" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development