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Financial Economics - ECON5106
 The Quad

   
   
   
 
Campus: Kensington Campus
 
 
Career: Postgraduate
 
 
Units of Credit: 6
 
 
EFTSL: 0.12500 (more info)
 
 
Indicative Contact Hours per Week: 3
 
 
Enrolment Requirements:
 
 
Prerequisite or Corequisite: ECON5203
 
 
CSS Contribution Charge:Band 3 (more info)
 
   
 
Further Information: See Class Timetable
 
  

Description

This course is concerned with developing the economic principles underlying the pricing of financial assets and the management of financial risk in an uncertain world. The course begins with a discussion of stock market indices, the concept of market efficiency and fixed interest securities. We then study decision making under uncertainty, portfolio theory and the capital asset pricing model. An important part of the course is concerned with how to price a contingent claim, for example, an insurance policy or a financial option. Many new financial products can be viewed as contingent claims. By applying contingent claims analysis, the arbitrage-free price of a new financial product can be ascertained. We will also consider how to value the capital structure of a firm using contingent claims analysis. The course concludes with a brief discussion of binomial option pricing.

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© The University of New South Wales (CRICOS Provider No.: 00098G), 2004-2011. The information contained in this Handbook is indicative only. While every effort is made to keep this information up-to-date, the University reserves the right to discontinue or vary arrangements, programs and courses at any time without notice and at its discretion. While the University will try to avoid or minimise any inconvenience, changes may also be made to programs, courses and staff after enrolment. The University may also set limits on the number of students in a course.