FINANCIAL ECONOMICS

Financial Economics is one of the core educational courses of the program and it is meant to provide the students with the core knowledge of financial economics.

Students gain general knowledge about financial economics. After an introduction to the characteristics and functioning of financial markets, the major financial economics models are analyzed. Starting from the standard theory of decisions under uncertainty, we formulate simple economic models with financial markets to determine the value of interest rates and stochastic discount factor in equilibrium. The central part of the course is the study of static portfolio choices, with particular reference to the Mean-Variance Portfolio Theory of Markowitz. The deals also with arbitrage theory an to its application to the pricing of financial derivates.

Fundamental knowledge of microeconomics, probabilities, calculus, welfare economics as acquired in the first three semesters of the course

Introduction to Financial Markets
- Functions and structure of financial markets
- Stock market indexes (additional and non compulsary)

Decisions under risk
- Utility maximization under risk
- Von Neumann-Morgenstern expected utility theory
- Risk aversion

Equilibrium in financial economies
- Interest rates and intertemporal preferences
- Stochastic discount factor and risk preferences

Static Portfolio Choices
- Portfolio choices with one risky and one risk-less asset
- Markowitz Mean-Variance Portfolio Theory

Arbitrage Theory
- Arbitrage
- Complete and incomplete markets
- The fundamental theorem of financial evaluation
- An introduction to the pricing of derivates

The course material is composed of lecture notes and selected chapters from

- Investments, Zvi Bodie Alex Kane Alan J. Marcus , 10th Edition. [BKM]
- The Economics of Financial Markets, Roy E. Bailey, Cambridge University Press, 2005. [B]

Other useful textbooks are

- Microfoundations of Financial Economics, Yvan Lengwiler, Princeton University Press, 2004. [L]
- The Economics of Money, Banking, and Financial Markets, Frederick S. Mishkin, Kent Matthews, Massimo Giuliodori 10th edition. [MMG]

The final exam consists of a written exam with exercises and theoretical questions on the various parts of the course for a total of 4 questions. The exercises are similar to those proposed weekly in class and assigned to students week by week in the form of homework assignment.

written

Each question is evaluated up to 8 points depending on whether it is unsatisfactory (up to 2 points), partially satisfactory (up to 4 points), satisfactory (up to 6 points), fully satisfactory (up to 8 points). The sum of the points of the questions and the evaluation of the exercises done weekly as homework (evaluated up to 2 points) constitutes the grade of the exam.

The teaching method consists of (i) lectures, (ii) weekly exercises, (iii) individual work.

Course material can be found on the moodle platform.

Accessibility, Disability and Inclusion
Accommodation and support services for students with disabilities and students with specific learning impairments

Ca’ Foscari abides by Italian Law (Law 17/1999; Law 170/2010) regarding support services and accommodation available to students with disabilities. This includes students with mobility, visual, hearing and other disabilities (Law 17/1999), and specific learning impairments (Law 170/2010). If you have a disability or impairment that requires accommodations (i.e., alternate testing, readers, note takers or interpreters) please contact the Disability and Accessibility Offices in Student Services: disabilita@unive.it

This subject deals with topics related to the macro-area "Poverty and inequalities" and contributes to the achievement of one or more goals of U. N. Agenda for Sustainable Development