Financial Economics is concerned with understanding how financial instruments are priced in markets and how individuals and firms manage financial risk.

Markets for financial instruments arise because some firms and individuals want to borrow while others want to save. A large corporation, for example, may borrow funds to purchase new plant and equipment by issuing further stock while an individual may save by purchasing stocks or government bonds. Markets for financial instruments also arise because firms and individuals want to manage financial risk. For example, a large corporation may bet against the risk of large fluctuations in the Australian - U.S. dollar exchange rate by selling its goods by way of futures contracts. Understanding how the prices of financial instruments are determined in the market place is a central concern of financial economics, along with the design of new financial derivatives.

The area of financial economics that deals with the study of real-world data is known as financial econometrics. Financial econometrics is concerned with the statistical analysis of financial data and testing the real-world applicability of asset-pricing theories. This major provides students with a thorough understanding of the economic principles that underlie the pricing and allocative role of all financial assets, whether they are stocks, bonds, futures or options.

Students must complete:

Note- students must have completed the first year core requirements* (these do not count towards the major or minor requirements)

Honours level study is also available in Financial Economics.

Students interested in Honours should refer to the Honours plan record for entry requirements.

Please note that requirements for this major may be subject to change.

Students are advised to follow the major requirement according the year they commenced. Current students are to refer to previous editions of the Online Handbook for major requirements.

If students are unsure of major requirements please contact the Business Student Centre for advice

Business Student Centre
e-mail:ugbusiness@unsw.edu.au
tel: + 61 2 9385 3189
location: Ground Floor, West Wing, Australian School of Business Building