Econ 234 // Prof. Dan Friedman

Financial Institutions and Markets

A second MS course in finance, Economics 234 first reviews the three economic pillars of finance: intertemporal trade, risky choice, and asymmetric information. The course then examines the financial institutions and financial markets that currently rest on these pillars.

Course prerequisites are first year MS courses (or equivalent background) in finance, econometrics, macro and microeconomics.

The primary text is Capital Markets: Institutions and Instruments, 4th Edition, by Fabozzi and Modigliani (Prentice-Hall, 2009), denoted FM below. Supplementary required readings include Wall Street Journal, New York Times, The Economist or a comparable news source. Additional readings are on reserve in the Science Library and/or posted below.

Grades are based on class participation and homework (20%), midterm exam (30%), presentation of a key institution or market (10%), and term project (40%).

The term project, consisting of an oral presentation and a term paper, will apply course material to a recent development in financial markets, e.g., the impact of credit default swaps on risk spreads from 2006 through 2010.

The class meets 8-11:30am Tuesdays in Baskin 169.

Office hours are Wednesdays 3:45-5pm and by appointment in 417 Engineering 2.

Due dates

Homework: noon Thursday January 19, February 2.

Midterm: 10am Thursday February 16.

Term paper: noon Monday March 19

Readings // All // syl // hw1 //