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Unit of study_

ECOS3022: The Economics of Financial Markets

Financial assets play a vital role coordinating the actions of savers and investors; consequently, they play a crucial role in creating wealth and facilitating economic activity. The aim of this unit is to explore the economic principles underlying: the pricing and development of financial assets; the trade-off between risk and return and the how investors construct portfolios in response to this trade-off. The focus is on the economics of financial markets: the factors of demand and supply; risk and uncertainty; incomplete contracts and renegotiation; and asymmetric information and its implications. We will emphasize the key aspects of markets for financial assets and the main differences to markets for consumption goods. The unit also examines the development of financial institutions and current issues in financial markets.

Code ECOS3022
Academic unit Economics
Credit points 6
((ECOS2001 or ECOS2901) and (ECOS2002 or ECOS2902)) or (ECOS2040 and ECMT2130)

At the completion of this unit, you should be able to:

  • LO1. understand the fundamentals of asset pricing
  • LO2. understand the roles of the financial markets
  • LO3. relate theoretical predictions to stylized asset pricing patterns
  • LO4. demonstrate skills in problem solving.