ECON5421 FINANCIAL ECONOMICS
This course is on the economic foundation of modern asset pricing theory.
It serves as an introduction to the functioning of the financial market as an efficient venue for
organizing investment activities. Various issues on risk measurement, risk assessment, managing
risk, investors’ psychological attitudes towards risk, and its implications on consumption and
portfolio decision making in an uncertain world will be introduced and discussed. The classical
Markowitz’s mean-variance analysis, CAPM, multi-factor asset pricing theory and no-arbitrage
asset pricing theory as cornerstones of modern finance will be received in-depth treatment.