COURSE INTRODUCTION AND APPLICATION INFORMATION


Course Name
Financial Economics
Code
Semester
Theory
(hour/week)
Application/Lab
(hour/week)
Local Credits
ECTS
ITF 605
Fall/Spring
3
0
3
10
Prerequisites
None
Course Language
English
Course Type
Elective
Course Level
Third Cycle
Course Coordinator
Course Lecturer(s)
Assistant(s) -
Course Objectives The course will provide students with a working knowledge of the classical finance model, which is the foundation for modern finance. It establishes a foundation for examining the role of asymmetric information in financial markets.

Learning Outcomes The students who succeeded in this course;
  • will be able to develop a comprehensive conceptual framework of capital markets research
  • will be able to understand the classic papers, recent contributions to frontier topics
  • will be able to acquire the skills to conduct and present original research on asset pricing
  • will be able to write a research paper related to financial economics topics
  • will ne able to explain the role of asymetric information in financial markets.
Course Content This course examines the economic principles that determine the allocation of resources through time in market economies. It uses supply and demand relationships to value capital assets (or projects more generally). There is a detailed treatment of the effects of risk and taxes on capital asset prices, and the ModiglianiMiller financial policy irrelevance theorems are derived and examined in detail.

 



Course Category

Core Courses
Major Area Courses
Supportive Courses
Media and Managment Skills Courses
Transferable Skill Courses

 

WEEKLY SUBJECTS AND RELATED PREPARATION STUDIES

Week Subjects Related Preparation
1 Introduction
2 Preferences and utility; risk aversion; expected utility theory Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
3 Preferences and utility; risk aversion; expected utility theory Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
4 Portfolio choice in theory and in practice; nonexpected utility theory and prospect theory , CAPM and APT Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
5 Portfolio choice in theory and in practice; nonexpected utility theory and prospect theory , CAPM and APT Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
6 Consumptionbased asset pricing; stochastic discount factor; equity premium puzzle and proposed explanations (habit formation; prospect theory, risk for the long run, rare events) Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
7 Consumptionbased asset pricing; stochastic discount factor; equity premium puzzle and proposed explanations (habit formation; prospect theory, risk for the long run, rare events) Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
8 MIDTERM
9 Investment/production based asset pricing; Tobin's q theory Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
10 Investment/production based asset pricing; Tobin's q theory Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
11 value premium puzzle and its explanations; alternative threefactor model; asset pricing in general equilibrium Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
12 value premium puzzle and its explanations; alternative threefactor model; asset pricing in general equilibrium Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
13 Asset pricing with differential information (competitive and strategic rational expectation models, sequential trading model) and behavioral finance Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
14 Asset pricing with differential information (competitive and strategic rational expectation models, sequential trading model) and behavioral finance Stephen F. Leroy & Jan Werner, Principles of Financial Economics, Cambridge University Press, 2001

John H. Cochrane, Asset Pricing, Princeton University Press, 2001
15 Review of the Semester  
16 Review of the Semester  
Course Textbooks Book Chapters and Powerpoint slides
References Journal of Financial Econometrics, Journal of Econometrics, Journal of Applied Econometrics, Econometric Reviews, Journal of Empirical Finance, Financial Times, Wall Street Journal

 

EVALUATION SYSTEM

Semester Requirements Number Percentage
Participation
16
10
Laboratory / Application
Field Work
Quizzes / Studio Critiques
Homework / Assignments
5
30
Presentation / Jury
Project
Seminar / Workshop
Midterms / Oral Exams
1
30
Final / Oral Exam
1
30
Total

Contribution of Semester Work to Final Grade
70
Contribution of Final Work to Final Grade
30
Total

ECTS / WORKLOAD TABLE

Activities Number Duration (Hours) Workload
Course Hours
Including exam week: 16 x total hours
16
3
48
Laboratory / Application Hours
Including exam week: 16 x total hours
16
Study Hours Out of Class
16
3
Field Work
Quizzes / Studio Critiques
Homework / Assignments
5
6
Presentation / Jury
Project
Seminar / Workshop
Midterms / Oral Exams
1
25
Final / Oral Exam
1
29
    Total
180

 

COURSE LEARNING OUTCOMES AND PROGRAM QUALIFICATIONS RELATIONSHIP

#
Program Qualifications / Outcomes
* Level of Contribution
1
2
3
4
5
1 Developing scientific expertise and capabilities in the field of finance through using creative and critical thinking and research skills; innovatively contribute to the discipline by new ideas and definitions based on the graduate level qualifications.
2 Comprehending the interaction across various disciplines related to the field of finance, reaching at original conclusions by using new and complex analysis, synthesis and evaluation skills.
3 Developing and championing new approaches to contribute the field of finance through apprehending the research methods.
4 Contributing to the science of finance through developing new methods or implementing an existing method to a different field through investigating, comprehending, designing original topics.
5 Conducting independent research, analyzing scientific phenomenon through broad, deep and critical perspective, arriving at new syntheses and evaluations in the discipline of finance.
6 Publishing scientific articles in reputable refereed national and international journals, presenting papers in scientific conferences in the field of finance and its sub-disciplines.
7 Following, attending and organizing national and international events such as conferences, seminars and panels to keep up with developments and create new solutions to the problems in the field of finance.
8 Following pioneering and innovative theories and methods in the field of finance and implementing them in analysis and research.
9 Developing creative solutions to the social, scientific and ethical issues within the scope of finance and business life and extending values that supports these solutions.
10 Being able to use English fluently for both comprehending and publishing scientific publications and developing proper communication.

*1 Lowest, 2 Low, 3 Average, 4 High, 5 Highest

 

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