Two main themes of this course are:
Understanding the economics behind financial markets and asset prices.
Understanding individual investment decisions.
We start with an overview of the different roles of the financial industry and their importance. We will talk about portfolio choice and some methods of valuation for risky assets. We will study a frequently used model known as the CAPM. There will be a discussion of the Efficient Market Hypothesis. We will then use the binomial model to learn about option pricing and the fundamental theorems of finance. There will be a unit on fixed-income securities.
This course builds on the fundamental concepts and techniques learned in Principles of Microeconomics (ECON 1101). At the intermediate level, we will engage in a more mathematically rigorous treatment of microeconomics to sharpen our theoretical understanding of economic models.
After completing ECON 3101, you should be able to:
Solve single and multiple, constrained and unconstrained, optimization problems;
Interpret standard economic models in consumer theory, firm theory, partial equilibrium,
General equilibrium, game theory, monopoly, and imperfect competition settings;
Relate economic theory of public economics to real world examples and to empirical observations;