ECON0063 - Topics in Money and Finance

Aims:
The aim of the course is to provide students with a thorough understanding of core concepts and methods of financial economics. The course will also offer an introduction to active areas of research in finance that students may consider for further study and independent research.

Course outline:
In particular, the course will focus on asset pricing and portfolio theory. The course is divided into two parts. The first part discusses models in which market participants have the same information. The second focuses on models where market participants can have different information. It also briefly discusses models of behavioural finance. In the first part, we will cover topics such as Arrow-Debreu securities, complete and incomplete markets, mean-variance analysis, capital asset pricing model (CAPM), arbitrage pricing theory (APT). In the second part, we will offer an introductory study of market microstructure, asymmetric information, rational expectations models, sequential trade models, market efficiency, no trade theorems and behavioural finance. We will discuss how these models can help us understand herd behavior, financial crises, booms and crashes.