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Module Title
LH Economics of Financial Markets
School
Birmingham Business School
Department
Birmingham Business School
Module Code
08 08380
Module Lead
John Fender
Level
Honours Level
Credits
10
Semester
Semester 2
Pre-requisites
Co-requisites
Restrictions
Available to all students who have been allowed onto the second year of a degree programme in the Department of Economics (including Joint Honours) or who have passed 08 28536 LI Microeconomics and 08 29189 Macroeconomics
This module examines economic theories of financial market behaviour and discusses their empirical relevance. A prime focus is the determination of asset prices. The first part of the module concentrates on bond markets. It discusses how bond prices are determined and the term structure of interest rates. The second part of the module explores portfolio allocation decisions, using the Mean-Variance model of Markowitz and the Capital Asset Pricing Model (CAPM). The third part of the module explores the efficiency of financial markets (particularly stock markets). The determination of share prices and the Efficient Markets Hypothesis are discussed, as well as some of the many stock market ‘anomalies’. This leads us on to a discussion of bubbles and crashes and the implications of heterogeneous investors for asset market behaviour. If time permits, we will finally discuss the implications of what we have learned in the course for both policy and investor behaviour.
Learning Outcomes
On completion of this module students should be able to:
demonstrate systematic knowledge and understanding of the microeconomic basis of financial economics;
analyse the behaviour of asset markets and prices using theoretical models;
apply these models to specific context and critically evaluate their empirical implementation.
Assessment
08380-01 : Exam : Exam (Centrally Timetabled) - Written Unseen (50%)
08380-03 : Canvas weekly quizzes : Class Test (50%)
Assessment Methods & Exceptions
Assessment: Weekly Canvas quizzes (10 x 5% = 50%), 1-hour final exam (50%). Reassessment: by failed element
Other
Duplicate of Dubai-based module 08 30413
Reading List
Keith Pilbeam, Finance & Financial Markets, Palgrave Macmillan, fourth edition (if available), otherwise third edition (2010).