Investments and Financial Markets

As wealth has grown in importance as an economic variable, professional economists and practitioners alike have studied the behavior of financial markets, and the behavior of people in those markets. The markets for equities, bonds, commodities, and foreign exchange are each quite independent, and yet prices in several markets may suddenly correlate, especially in a crisis. This course presents a wide range of techniques to analyze markets. In equities, we study valuation models and portfolio diversification. In bonds, we study the yield curve and concepts such as duration and convexity. In commodities, we study both fundamental analysis and technical analysis. In foreign exchange, we study interest rate parity and purchasing power parity. And, we study derivatives and options pricing models. The management of wealth ultimately depends on the management of risk, and we conclude with a study of risk management techniques. (ECON 0150 and ECON 0155 and ECON 0210) 3 hrs. lect., 1 hr. lab