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Financial Economics
OVERVIEW
CEA CAPA Partner Institution: Universidad Carlos III de Madrid
Location: Madrid, Spain
Primary Subject Area: Economics
Instruction in: English
Course Code: 13166/13747
Transcript Source: Partner Institution
Course Details: Level 200
Recommended Semester Credits: 3
Contact Hours: 42
Prerequisites: Mathematics for Economics I & Mathematics for Economics II
DESCRIPTION
1. Introduction to Financial Markets
a. Financing investment in the economy
b. Financial markets and trading financial assets
2. Financial Mathematics
a. Introduction: The time value of money
b. Simple and compound interest. Equivalent interest rates.
c. Present and Future Values.
d. Annuities
3. Investment Appraisal
a. Cash flows
b. Determining current and future values
c. Net present value of an investment project
d. Internal rate of return
e. Other valuation techniques
4. Risk and Return
a. Mathematical representation of a portfolio
b. Expected portfolio returns
c. Variance and standard deviation
d. Finding the minimum variance portfolio
e. Graphical representation of expected return and standard deviation of a portfolio
5. Portfolio Theory
a. Diversification Effect
b. Assumptions of the Mean-Variance Analysis
c. The Efficient Frontier
d. The tangency portfolio
6. The Capital Asset Pricing Model (CAPM)
a. Relationship between risk and expected return
b. The CAPM model
c. The CML and The SML
d. Portfolio Beta
7. Fixed Income Securities
a. Valuation of fixed income
b. The term structure of Interest Rates
c. Forward interest rates
d. Default risk
e. Risk Management
8. Derivatives Products
a. Types of derivatives
b. Pricing Principles
a. Financing investment in the economy
b. Financial markets and trading financial assets
2. Financial Mathematics
a. Introduction: The time value of money
b. Simple and compound interest. Equivalent interest rates.
c. Present and Future Values.
d. Annuities
3. Investment Appraisal
a. Cash flows
b. Determining current and future values
c. Net present value of an investment project
d. Internal rate of return
e. Other valuation techniques
4. Risk and Return
a. Mathematical representation of a portfolio
b. Expected portfolio returns
c. Variance and standard deviation
d. Finding the minimum variance portfolio
e. Graphical representation of expected return and standard deviation of a portfolio
5. Portfolio Theory
a. Diversification Effect
b. Assumptions of the Mean-Variance Analysis
c. The Efficient Frontier
d. The tangency portfolio
6. The Capital Asset Pricing Model (CAPM)
a. Relationship between risk and expected return
b. The CAPM model
c. The CML and The SML
d. Portfolio Beta
7. Fixed Income Securities
a. Valuation of fixed income
b. The term structure of Interest Rates
c. Forward interest rates
d. Default risk
e. Risk Management
8. Derivatives Products
a. Types of derivatives
b. Pricing Principles
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