Most students of statistics will learn that variability is the key to separating transient differences from reproducible differences. But many students will not understand the role of variability in the financial markets. Concepts of “risk” and “diversification” are often misused in this context, and this misuse can be blamed on a faulty application of basic statistics. In this talk, I describe how to introduce students to portfolio management though virtual portfolios, and how to assess risk and diversification. The talk will also show how to introduce students to the idea of options without getting into the arcane details. An exposure to these ideas will help students to leverage their understanding of basic statistics in selling their expertise to future employers. Some programs in R can be made available to teachers who wish to use this approach.
(Thursday 17th, 13:45-15:15) In session C13B
Larry Weldon (Canada)