1. Semester: III/IV
2. Number of Credits: 4

Preamble
The objective of the course is to introduce students over 48 lectures to important aspects of Financial Economics such as the mean-variance portfolio theory, the capital asset pricing model, efficient markets hypothesis as also to macroeconomics aspects such as financial markets and firms in financial markets. 

Module 1: Capital Asset Pricing Model (12 Lectures)
Mean-Variance criterion, measuring risk and return for a single asset and for a Portfolio, Portfolio diversification, Portfolio efficiency frontier, capital market line, market portfolio, security market line, extensions of the CAPM, performance measures, Roll’s critique, arbitrage pricing theory

Module 2: Valuation Models and Bubbles (12 Lectures)
Rational Valuation Formula, Consumption CAPM, Efficient Markets Hypothesis – Euler Equation and the Rational Valuation Formula – Intrinsic Bubbles - Noise Traders and Herding, Noise Traders and Rational Valuation Formula, Noise Traders and Contagion

Module 3: Systems of Financial Markets (12 Lectures)
Spot Markets – Contingent Claims Markets – Arrow Securities – Ordinary Securities Markets – Incomplete Markets – Financial Markets and Financial Intermediaries. 

Module 4: Firms and Financial Markets (12 Lectures)
Firms and Stock Market Equilibrium – Separation of Ownership and Control – Financial Structure of the Firm – Insurance Markets – Debt Contracts – Credit Rationing.