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To complete college (or what the equivalent in Denmark would be) I will have to write a text about a topic that I choose. I have chosen to write about mathematics in business economics, and specifically, I want it to be about investment analysis and risk assessment. I am seeking some inspiration for possible mathematical topics to include. My knowledge in math is at bachelor degree, but I am up for a challenge. I already have a few ideas, e.g. I am pretty sure I will include something about the poisson distribution.

Any answer is appreciated. Thank you in advance.

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  • $\begingroup$ Do you mean like Gymnasium? Because the word "college" has different meanings in different countries and the Poisson distribution would be more of Gymnasium level than of Universitet level. It's just so we understand the question correctly $\endgroup$ – Patrick Da Silva Oct 11 '16 at 21:49
  • $\begingroup$ Yes, gymnasium. However, my math is higher than that level, and I want my "assignment" to be that as well. The example was just to give you an idea of what kind of math I am interested in. $\endgroup$ – Martin Vestergaard Oct 11 '16 at 21:57
  • $\begingroup$ You might want to look into, NPV, duration, convexity, the Black-Scholes Equation, mean-variance analysis, Principal Component analysis. The CFA / FRM curriculum. $\endgroup$ – Doug M Oct 12 '16 at 16:13
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    $\begingroup$ The question is perfectly good when viewed as a reference request or a request for advice based on teaching experience or real world knowledge. The answers received to date are based on facts and references and I find it unlikely that the question will lead to a lot of opinionated debate. $\endgroup$ – Rob Arthan Oct 12 '16 at 22:44
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You might look at how over-reliance on the normal distribution contributed to the Great Financial Crisis.

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  • $\begingroup$ Do you have any sources that one could read on this? I'm just curious myself. $\endgroup$ – Eff Oct 11 '16 at 21:52
  • $\begingroup$ I just looked it up, and it seems very interesting. But I couldn't find a whole lot about it. Do you have some specific papers in mind? $\endgroup$ – Martin Vestergaard Oct 11 '16 at 21:59
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    $\begingroup$ look at work by Nassim Taleb for this topic. $\endgroup$ – Trurl Oct 12 '16 at 1:42
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    $\begingroup$ "The Misbehavior of Markets" by Mandelbrot, "Fooled by Randomness" - Taleb, "Models.Behaving.Badly" - Derman. $\endgroup$ – Doug M Oct 12 '16 at 16:16
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Or try Iceberg Risk by Kent Osband. Hull has another book, Risk Management and Financial Institutions that will also have examples. So I second @Rob Arthan.

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Hull's book "Options, Future and Other Derivatives" is a well-organised and well-written text that might be a useful source of examples for you.

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