GIVE NOW about ocw help & faqs contact us
18.642 | Fall 2024 | Undergraduate

# Topics in Mathematics with Applications in Finance

### Lecture 2

Viewing videos requires an internet connection
View video page

- Download video
- Download transcript

Video description: The lecture introduces linear algebra with a focus on its applications in quantitative finance, covering vector and matrix fundamentals, portfolio valuation, and concepts like short selling, arbitrage, and contingent claims. It further explores stochastic matrices and Markov chains, eigenvalues and eigenvectors, and their roles in modeling financial markets, culminating in discussions on no-arbitrage conditions, market completeness, and pricing measures essential for option pricing theory.

Linear Algebra Slides (PDF)

One-Period Financial Models Lecture Notes (PDF)

Instructions for Running Equal Weighted Portfolios.Rmd (PDF)

Equal Weighted Portfolios (ZIP)

See Problem Set 1, due one day after lecture 3

### Lecture 3

Guest Lecture: “Quantitative Equity Investing” with Jeff Shen, BlackRock Investment Institute
Note: This guest lecture video is not available to OCW learners.

## Course Info

##### Instructors

- Dr. Peter Kempthorne
- Dr. Vasily Strela
- Dr. Jake Xia

##### Departments

- Mathematics

##### As Taught In

Fall 2024

##### Level

Undergraduate

##### Topics

- Business
  - Finance
- Mathematics
  - Applied Mathematics
  - Probability and Statistics

##### Learning Resource Types

notes Lecture Notes
theaters Lecture Videos
assignment Problem Sets
assignment Activity Assignments
group_work Projects
Readings

Browse Resources

# You are leaving MIT OpenCourseWare

Please be advised that external sites may have terms and conditions, including license rights, that differ from ours. MIT OCW is not responsible for any content on third party sites, nor does a link suggest an endorsement of those sites and/or their content.