Important external links
Guide to the SoA written exams
Desmos: An online graphing and scientific calculator
Lecture notes and the like
A few “shortcuts” for R and RStudio
Here are some resources I created for Applied Statistics. They will be useful in this course as well and can be used in conjunction with our lecture notes.
Class 1: August 24th, 2026
Orientation.
Important prerequisite topics: A checklist of the prerequisite material.
Class 2: August 26th, 2026
Setting up R and
RStudio. Basics of R: Arithmetic. Vectors. R-scripts.
Class 3: August 28th, 2026
For
loops. Functions in R. If ... else in R.
R-notebooks.
Problem Set #1: Problems we will work on in class
Problem Set #1: Solutions from class
Background.
Lecture One: Background.
Homework #1 – due on Friday, September 4th, 2026
Class 4: August 31st, 2026
Prerequisite
review.
Problem Set #2: Problems we will work on in class
Problem Set #2: Solutions
Class 5: September 2nd, 2026
Standing
assumptions and conventions. Risky assets. Transaction costs.
Lecture Two: Transaction Costs
Lecture Three: Standing Assumptions and conventions
Outright purchase.
Class 6: September 4th, 2026
Historical returns
of stocks.
Wikipedia: Stock market index
The Normal Distribution from the Wolfram Demonstrations Project by Ian McLeod
Homework #2 – due on Friday, September 11th, 2026
Project #1
Alphabet data – the data for Project #1
Project #1 – due on Monday, September 21st, 2026
Project #1 - this is the Rmd file which you are more than welcome to use to neatly complete your project
Class 7: September 9th, 2026
Short
sales.
Investopedia: On margin accounts for short sales
On portfolios.
The R-notebook for class: Problems
The R-notebook from class: Complete solutions
Class 8: September 11th, 2026
Payoff and
profit.
Lecture Four: Initial cost, payoff and profit (the simplest case).
Problem Set #3: Problems we will work on in class
Problem Set #3: Solutions
Homework #3 – due on Friday, September 18th, 2026
Class 9: September 14th, 2026
Basic risk
management. Forward contracts.
Lecture Five: Basic risk management. Forwards.
Class 10: September 16th, 2026
Hedging using
forward contracts.
Wikipedia: Hedging
Problem Set #4: Problems
Problem Set #4: Solutions
Class 11: September 18th, 2026
European call
options.
Lecture Six: European call options.
Problem Set #5: Problems
Problem Set #5: Solutions
Homework #4 – due on Friday, September 25th, 2026
Class 12: September 21st, 2026
Hedging with
European call options.
Problem Set #6: Problems
Problem Set #6: Solutions
Homework #5 – due on Friday, October 2nd, 2026
Class 13: September 23rd, 2026
European put
options. Moneyness.
Lecture Seven: European put options. Moneyness.
Problem Set #7: Problems
Problem Set #7: Solutions
Class 14: September 25th, 2026
Hedging using
European put options.
Problem Set #8: Problems
Problem Set #8: Solutions
Homework #6 – for practice; not to be handed in
Homework #6 – solutions
(Enrichment material) Lecture Eight: Collars.
(An interesting read) Employee stock options
(Another interesting read) Life Assurance Act (1774)
Class 15: September 28th, 2026
Review. Finite
probability spaces [revisited]. Arbitrage portfolios.
Class 16: September 30th, 2026
Law of the Unique
Price. Replicating portfolios.
(Enrichment material) Lecture Ten: Pricing prepaid forwards and forwards on stocks.
In-Term #1
In-Term One: Topics
Practice for In-Term One – problems
Practice for In-Term One – solutions
Class 17: October 2nd, 2026
Equity-linked
contracts.
(Enrichment material) Lecture Nine: Derivative securities.
Problem Set #9: Problems
Problem Set #9: Solutions
Class 18: October 5th, 2026
Put-call
parity.
(Enrichment material) Lecture Eleven: Put-call Parity with dividends.
Project #2
Notes: Convexity of functions - useful for a problem in the project
Dow data – data for Project #2
Dow futures data – data for Project #2
Apple call data – data for Project #2
Apple parity – more data for Project #2
Project #2 – due on Monday, October 19th, 2026
Project #2 - this is the Rmd file which you are more than welcome to use to neatly complete your project
Class 19: October 7th, 2026
In-Term One
Class 20: October 9th, 2026
Chooser
options.
Homework #7 – due on Friday, October 16th, 2026
(Enrichment material) Lecture Twelve: Gap options.
(Enrichment material) Lecture Thirteen: Exchange options
(Enrichment material) Lecture Fourteen: Call/put-price bounds. Bull spreads.
(Enrichment material) Lecture Fifteen: Call-price convexity.
Class 21: October 12th, 2026
Random number
generation.
Wikipedia: Random number generation
Wikipedia: Mersenne twister
The Strong Law of Large Numbers. Monte Carlo simulations.
Lecture notes: The Monte Carlo method.
Problem Set #10: Solutions
Class 22: October 14th, 2026
The binomial
asset-pricing model. Realized returns of stocks.
Problem Set #11: Problems
Problem Set #11: Solutions
(Enrichment material) Lecture Sixteen: The binomial asset-pricing model with continuous dividends.
Class 23: October 16th, 2026
Forward
trees.
Homework #8 – due on Friday, October 23rd, 2026
Class 24: October 19th, 2026
Binomial option
pricing: Pricing by replication.
Problem Set #12: Problems
Problem Set #12: Solutions
Class 25: October 21st, 2026
Binomial option
pricing: Risk-neutral probability.
Problem Set #13: Problems
Problem Set #13: Solutions
Homework #9 – due on Friday, October 30th, 2026
(Enrichment material) Lecture Seventeen: Binomial option pricing with continuous dividends.
(Enrichment material) Lecture Eighteen: Forward trees on continuous-dividend-paying stocks.
Class 26: October 23rd, 2026
Binomial option
pricing: Two periods.
Problem Set #14: Problems
Problem Set #14: Solutions
Class 27: October 26th, 2026
Multiple binomial
periods.
Problem Set #15: Problems
Problem Set #15: Solutions
Homework #10 – due on Friday, November 6th, 2026
Class 28: October 28th, 2026
Monte Carlo for
binomial option pricing.
Problem Set #16 – Skeleton
Problem Set #16 – Complete
Project #3
Apple put data – the data for Project #3
Project #3 – due on Monday, November 16th, 2026
Project #3 - this is the Rmd file which you are more than welcome to use to neatly complete your project
Class 29: October 30th, 2026
Review of the
normal distribution.
Homework #11 – for practice; not to be handed in
Homework #11 - solutions
The normal approximation to the binomial.
Open Intro Stats Video: The normal approximation to the binomial.
Problem Set #16: Problems
Class notes: Handwritten solutions to the problem set
Problem Set #16: Solutions
Class 30: November 2nd, 2026
The limiting
behavior of stock prices.
Mathematica Code: Binomial model limit
Moment generating functions. The log-normal distribution. Jensen’s
inequality.
Lecture notes: The lognormal distribution
The Log Normal Distribution from the Wolfram Demonstrations Project by Chris Boucher
