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Regular version of the site
Bachelor 2022/2023

Financial Economics

Type: Elective course (Economics and Statistics)
Area of studies: Economics
Delivered by: School of Finance
When: 3 year, 1, 2 module
Mode of studies: offline
Open to: students of one campus
Language: English
ECTS credits: 6
Contact hours: 64

Course Syllabus

Abstract

This is an introductory course in Finance which covers the basic principles of financial markets and asset pricing. We will discuss different financial instruments and how to use them for investment or hedging purposes. We will proceed to the basics of asset valuation. The starting point will be the present value formula. We will then talk about fixed-income securities, their valuation and the term structure of interest rates. The course will then move to stocks, starting with portfolio theory and then deriving the relation between risk and return. We will study the main asset-pricing models: the CAPM and the APT. We will talk about empirical multifactor models and various risk factors. We will discuss the major asset-pricing anomalies and investment strategies which exploit them. Finally, we will turn to derivatives, their replication and valuation based on no-arbitrage principle, and the use of them for hedging purposes. The course consists of lectures and classes. Each lecture is followed by a class where students solve numeric problems. There are short quizzes in classes and an optional research task. You must write a quiz in the class to which you are assigned. Attendance of other classes is only permitted in exceptional circumstances, and the class-teachers must be notified in advance. There is a written mid-term test in the middle of the course and a written final test at the end of the course. There is no make-up for the mid-term test and quizzes. If a student misses a quiz or a written test due to illness (with an evidence), the final grade is determined as follows: Final grade = Cumulative grade/(1-ωi), where ωi is the weight of test i. If a student misses a quiz or the mid-term test without supplying an evidence of illness (or another valid reason), the student gets zero for this form of control without any adjustment of the final grade. Final grades (in %) will be normalized to the top grade (i.e. divided by the highest grade in the cohort and multiplied by 100%) in case the top grade is below 100%. If the top grade is above 100%, all grades are not normalized. The final grade is calculated in percent, divided by 10 and rounded according to mathematical rules. If a student’s final grade is below the pass bar (35%), or if the student misses the final test, the re-take procedure follows the HSE rules. If a student misses the final test due to illness, there is a second attempt during the retake period. The course requires a sufficient amount of self-study and reading textbooks.