The discovery of atomically thin two-dimensional (2D) magnetic semiconductors has triggered enormous research interest recently. In this work, we use first-principles many-body perturbation theory to study a prototypical 2D ferromagnetic semiconductor, monolayer chromium tribromide (CrBr$_3$). With broken time-reversal symmetry, spin-orbit coupling, and excitonic effects included through the full-spinor $GW$ and $GW$ plus Bethe-Salpeter equation ($GW$-BSE) methods, we compute the frequency-dependent dielectric function tensor that governs the optical and magneto-optical properties. In addition, we provide a detailed theoretical formalism for simulating magnetic circular dichroism, magneto-optical Kerr effect, and Faraday effect, demonstrating the approach with monolayer CrBr$_3$. Due to reduced dielectric screening in 2D and localized nature of the Cr d orbitals, we find strong self-energy effects on the quasiparticle band structure of monolayer CrBr$_3$ that give a 3.8 eV indirect band gap. Also, excitonic effects dominate the low-energy optical and magneto-optical responses in monolayer CrBr$_3$ where a large exciton binding energy of 2.3 eV is found for the lowest bright exciton state with excitation energy at 1.5 eV. We further find that the magneto-optical signals demonstrate strong dependence on the excitation frequency and substrate refractive index. Our theoretical framework for modelling optical and magneto-optical effects could serve as a powerful theoretical tool for future study of optoelectronic and spintronics devices consisting of van der Waals 2D magnets.
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