ECON6029 Financial Economics and Asset Pricing

Module Overview

The goal of the first part is to encourage a basic understanding with the tools of financial economics with particular emphasis to general equilibrium asset pricing. Upon completion students should be confident in using standard techniques in order to address issues like the functions of financial markets and their efficiency properties as well as their traditional application to equity and bond pricing.

Aims and Objectives

Module Aims

The main goal of this module is to provide students with a basic understanding of the tools of financial economics, with a particular focus on general equilibrium asset pricing. Upon completion, students should be confident in using standard techniques to address issues like the functions and functioning of financial markets, and their efficiency properties, as well as be able to deal with standard application of financial theory to equity and bond pricing.

Learning Outcomes

Having successfully completed this module you will be able to:

Derive from basic principles the workhorse model of financial economics
Manipulate the model to address common empirical and theoretical applications. Students should be comfortable taking the model to data with standard applications
Solve the model and derive general results.
Vary the model and build arguments to study a wide variety of applications
Price a variety of assets

Syllabus

The course includes an examination of basic analytical frameworks such as expected utility and probability theory. A thorough General Equilibrium approach is the backbone of the course. Various popular asset pricing models are formally analyzed including CAPM and Option Pricing.

Learning and Teaching

Type	Hours
Independent Study	160
Teaching	40
Total study time	200

Resources & Reading list

Microfoundations of Financial Economics.

Notes will be made available via the course website on Blackboard.

Principles of Financial Economics.

Assessment

Summative

Method	Percentage contribution
Exam (3 hours)	60%
Mid-term test	40%

Referral

Method	Percentage contribution
Exam	100%

Repeat Information

Repeat type: Internal & External