Economics of Finance
Area of Study
Taught In English
ECON02101 or ECON2112
Course Level Recommendations
ISA offers course level recommendations in an effort to facilitate the determination of course levels by credential evaluators.We advice each institution to have their own credentials evaluator make the final decision regrading course levels.
Recommended U.S. Semester Credits3 - 4
Recommended U.S. Quarter Units4 - 6
Hours & Credits
OverviewThe valuation formulas used throughout the modern financial world are based on the economic theory of financial markets and general equilibrium. This course provides a treatment of the economic foundations of modern finance. We start with a discussion of how economics agents (should) make decisions when the economic environment is uncertain. Then, asset-pricing models are introduced, and we discuss how economic uncertainty can be dealt with using state-contingent securities, which in turn lead to efficient market outcomes when markets are complete. Further topics include option pricing, determination of firms' value and its relation to a firm's capital structure, and the theory of efficient portfolios. The tools and knowledge that students acquire in this course are particularly useful and sought after in the public and private finance sector.
Courses and course hours of instruction are subject to change.
Credits earned vary according to the policies of the students' home institutions. According to ISA policy and possible visa requirements, students must maintain full-time enrollment status, as determined by their home institutions, for the duration of the program.