Investment Decisions under certainty: the investment schedule, the meaning of indifference curves, optimal investment-consumption decisions, the money market line, separation of investment and financing decisions, finding the optimal investment, investment in securities under certainty.
Investment decisions under uncertainty: the nature of risk, the maximum return criterion, the maximum expected return criterion, the modern utility theory, alternative attitudes toward risk, the case of a linear utility function.
Utility functions and their shapes: partial information on preferences and decision-making, the Friedman-Savage hypothesis, the subjective utility approach, decreasing absolute risk aversion, risk attitudes in the stock market.
The efficiency analysis of investments under uncertainty: and stochastic dominance rules: the concept of an efficiency criterion, first degree stochastic dominance, second degree stochastic dominance, third degree stochastic dominance, efficiency criteria and diversification, the effectiveness of stochastic dominance criteria.
Investment valuation: investment valuation and risk importance, static and dynamic NPV, hints about stochastic NPV, mean-variance approach, stochastic dominance approach.
Real Options: a comparison between real and financial options, retrieval of Black and Scholes model and of the binomial model. Different approaches to the valuation of real options: classic, subjective, MAD, revised classic, integrated, DM method, Fuzzy number approach. Examples and applications.