Course

Financial Economics - ECON5106

Faculty: Australian School of Business

School: School of Economics

Course Outline: ECON5106 Course Outline

Campus: Sydney

Career: Postgraduate

Units of Credit: 6

EFTSL: 0.12500 (more info)

Indicative Contact Hours per Week: 3

Enrolment Requirements:

Prerequisite:COMM5005 and (COMM5002 or ECON5103)

CSS Contribution Charge: 3 (more info)

Tuition Fee: See Tuition Fee Schedule

Further Information: See Class Timetable

View course information for previous years.

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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