5010595: C20 Financial Economics

Description

• Introduction to financial economics Equilibrium and arbitrage Valuation, state prices, risk-neutral probabilities Expected utility, risk aversion, mean-variance theory Optimal portfolios

Learning Outcomes

• After completing this course, students...understand basic principles in financial economics (e.g., absence of arbitrage) and can apply them in discrete-time markets,link absence of arbitrage, state prices, and risk-neutral probabilities in complete and in incomplete markets,understand the implications of portfolio restrictions in financial markets, understand the classical models of risk and risk aversion and apply them to financial decision-making,are familiar with consumption-portfolio models and their optimization in discrete time.

Lectures Method

Interactive lecture

Literature

> LeRoy, S. F., & Werner, J. (2014). Principles of financial economics (2nd ed.). Cambridge: Cambridge University Press