ECON30170 Financial Economics: Asset Pricing

Academic Year 2023/2024

This course analyses, at both a practical and theoretical level, the process of investment in financial markets. Its aims are to introduce students to the various types of financial instruments in common use and to the economic theories that explain how they are priced. The types of securities considered include interest-bearing securities, equities and derivatives (options, futures, etc.). The course first explores how financial markets operate and how securities are bought and sold. The trade-off between higher returns and more `risky' pay-offs is then discussed. The problem of determining an optimal investment strategy, given beliefs about the probability distribution of returns, is also addressed. Other issues considered include the informational efficiency of financial markets and the relative usefulness of fundamental analysis and technical analysis in predicting price movements.

This course is not open to students taking the BSc in Economics & Finance.