MGMT 675



AI-Assisted Financial Analysis

Meet your Prof

  • At Rice since 2009, in Jones and in Econ Dept.
    • teach core finance, quantitative investments, investments theory, and python for business research
    • to PhDs, MBAs, and Masters in Data Science students
  • Previously at Northwestern, Indiana, Washington Univ. in St. Louis, and Texas A&M. Associate dean at Wash U.
  • Former and current editor and associate editor of several journals. Two textbooks (derivatives and PhD asset pricing theory). Materials and info at kerryback.com

Course Outline

  • Weekly assignments: use AI to do something, submit a report of the results
  • Timed at-home final exam during exam week: use AI to do something, submit a report of the results
  • Syllabus, slides, data sets, assignments, links to conversations at mgmt675.kerryback.com
  • Submit assignments through Canvas

Course Topics

  1. Simulation
  2. Data handling
  3. Cost of capital and performance evaluation
  4. Visualization
  5. Optimal portfolios
  6. Autocorrelation and autoregression
  7. Machine learning

Why this course?

How did we get here?

And where are we going?

Let’s do some time traveling

First hand-held calculator, introduced by Texas Instruments in 1972

First financial calculator, introduced by HP in 1973

VisiCalc, released for Apple II in 1979

Lotus 1-2-3, released for IBM PC in 1983

Microsoft Excel, released for Windows in 1987

Today’s Tools

  • Will Excel survive?
  • Will Excel retain its dominance?

Maybe …

The best we have today (I think)

What Julius does

  • Python interpreter connected to ChatGPT and other LLMs
  • Julius executes and debugs code
  • Provides links to images, tables, datasets it creates
  • Provides download of conversation (and code) as Jupyter notebook or Word doc
  • Allows us to upload our own data
  • Can get some online data
  • Can install any python libraries not pre-installed

Get a Julius account

  • Free account has very strict message limit
  • Basic allows 250 messages per month. Maybe enough?
  • Essential allows unlimited messages.
  • 50% academic discount. Sign up using your Rice email and enter the promo code STUDY2024.

Warm-Up

  • Ask Julius to plot the function \(y=x^2\).
  • Ask Julius to plot the payoff diagram of a call option with a strike of 100.
  • Ask Julius to use pandas datareader to get the 10-year Treasury yield from FRED, plot it, and save as a jpeg.
  • Ask Julius to use yfinance to get AAPL’s adjusted closing price from Yahoo Finance, plot it, and save as a jpeg.