ECON 510
Financial Economics
Spring 2014
Instructor:
Name:
Office:
E-Mail:
Office Hours:
Islam Rizvanoghlu
409
islam.rizvanoglu@zirve.edu.tr
Thursday 14:00-16:00
Course Objectives
Financial markets have evolved drastically in last few decades bringing new investment
opportunities and risks into the scene. Yet many basic principles of financial economics
remain important to understanding the fundamentals of financial markets. Interest rates
and rates of return affect our lives on a daily basis, now as they have in the past. A key
element of how much financial return is earned is the riskiness of assets such as stocks,
bonds and loans. What is risk and how is it related to the concept of efficient markets?
How does the riskiness of an asset influence rates of return and portfolio allocation, and
the decision of which assets investors buy? How are equities and bonds valued in an
efficient market? How are derivative assets priced? In this course, you will have the
opportunity to explore what financial economics has to say about these questions. The
focus of this course will be on investment analysis and asset pricing, with the aim of
conveying the practical applications of investment theory.
Textbook
Bodie, Zvi, Alex Kane and Alan J. Marcus, Investments, Global Edition, Irwin/McGrawHill, 2012
You are expected to read in advance the assigned chapter from BKM. This will facilitate
your participation in class discussions as well as improve you learning of new material.
I will use the wiki.zirve.edu.tr to post lecture slides and additional reading material.
Grading and exams
The final grade for the course will be determined based on the following performance
criteria:
Midterm I
Final
50%
50%
You should follow this course on wiki.zirve.edu.tr for announcements (exam dates,
seminars) and study guides for the exams.
COURSE SCHEDULE
Week 1
Chapter 1:
The Investment Environment
Chapter 2:
Asset Classes and Financial Instruments
Chapter 5:
Risk, Return, and the Historical Record
Chapter 6:
Capital Allocation to Risky Assets
Chapter 7:
Optimal Risky Portfolios
Chapter 8:
Index Models
Chapter 9:
The Capital Asset Pricing Model
Chapter 10:
Arbitrage Pricing Theory and Multifactor Models of Risk and Return
Chapter 11:
The Efficient Market Hypothesis
Chapter 14:
Bond Prices and Yields
Chapter 15:
The Term Structure of Interest Rates
Chapter 16:
Managing Bond Portfolios
Chapter 17:
Macroeconomic and Industry Analysis
Chapter 18:
Equity Valuation Models
Chapter 20:
Options Markets: Introduction
Chapter 21:
Option Valuation
Chapter 22:
Futures Markets