Term:Fall

Course Code:sd00231270

Campus:Main Campus

Academic Organization:Economics

Prerequisites:Advanced Mathematics, Microeconomics

Credit:3（48 teaching hours）

Course Components:Lectures and DiscussionRequired

Course Note:Optional for economics and finance student

Course Description:

Financial economics has been playing a more important role in the training of economic students than a decade ago. This is due to the explosive development of derivative trading in capital markets. Trillions of dollars of assets are traded daily in financial markets – derivatives like options, futures and more complicated CDOs (collateralized debt obligations), which serve the need of consumption and risk allocations. In basic financial economics, we analyze problems of security pricing and portfolio selection which involve time and uncertainty. It is essential for us to understand the classical methods to approach these problems. This class will cover utility theory, dynamic programming, and then binomial asset pricing model after that. We will discuss the basic theory and classical results with an emphasis on their application to real world problems.

The lectures and readings are quite difficult, so do not get discouraged if you find them so. My hope is that the course will help in making this interesting topic accessible to you.