Descriptif

Prerequisites: ECO101, ECO102 and ECO201.

This course introduces to basic issues regarding the financial system, i.e. markets and institutions intermediating saving and investment. After an informal description of the financial system, it starts with basic asset pricing, continues with  corporate finance theory (Modigliani-Miller theorem and its deviations), then turns to the study of banking, insurance and financial markets. Whenever possible, it connects theory with contemporary issues.

Introduction to Finance (ECO 204) introduces fundamental ideas of modern portfolio theory and corporate finance. Topics include present value and discounting, interestrates and yield tomaturity, various financial instruments including financial futures, mutual funds, the efficient market theory, basic asset pricing theory, the capital asset pricing model, models for pricing options and other contingent claims, and the use of derivatives for hedging.