Program Overview

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Foundations in Financial Economics

The aim of this course is to expose EPFL bachelor students to some of the main areas in financial economics. The course will be organized around six themes. Students will obtain both practical insights through real-world examples and understand how one can model the main economic trade-offs.

Course Content

The course will be organized around six themes that are each covered over two or three weeks from two different angles. The covered themes are:

• The time value of money and capital budgeting
• The risk/return tradeoff and portfolio choice
• Derivatives pricing and hedging
• Capital structure
• Agency and contract theory
• Trading on private information

Keywords

Financial economics; investments; stock exchange; finance; stocks and bonds; options; corporate finance; capital budgeting

Learning Prerequisites

• Required courses: none
• Recommended courses: none
• Important concepts to start the course: none

Learning Outcomes

By the end of the course, the student must be able to:

• Explain standard valuations models used in financial markets
• Recall the trade-off between risk and return and develop an ability to make portfolio decisions
• Develop an ability to analyze and evaluate investment projects
• Describe derivatives markets and their benefits and costs
• Elaborate on the role of information in financial markets
• Analyze the determinants of an agency relation

Transversal Skills

• Plan and carry out activities in a way which makes optimal use of available time and other resources.
• Continue to work through difficulties or initial failure to find optimal solutions.
• Assess one's own level of skill acquisition, and plan their on-going learning goals.
• Access and evaluate appropriate sources of information.
• Collect data.

Teaching Methods

• Lectures
• Homework
• Case studies

Expected Student Activities

• Attend lectures
• Complete homeworks in groups
• Participate in class

Assessment Methods

• Assignments, completed in groups during the semester (100%)

Supervision

• Office hours: Yes
• Assistants: Yes
• Forum: Yes

Resources

• Lecture notes will be provided for each lecture

Program Details

• Semester: Fall
• Number of places: 80
• Exam form: During the semester (winter session)
• Subject examined: Foundations in financial economics
• Courses: 2 Hour(s) per week x 14 weeks
• Type: mandatory

Schedule

• Tuesday, 13h - 15h: Lecture MXF1

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