The Economics Of Financial Markets

The Economics of Financial Markets presents a concise overview of capitalmarkets suitable for advanced undergraduates and for beginning graduatestudents in fina... » 

The Economics of Financial Markets presents a concise overview of capitalmarkets suitable for advanced undergraduates and for beginning graduatestudents in financial economics. Following a brief overview of financialmarkets their microstructure and the randomness of stock market prices thistextbook explores how the economics of uncertainty can be applied to financialdecisionmaking. The meanvariance model of portfolio selection is discussedwith analysis extended to the capital asset pricing model CAPM. Arbitrageplays a pivotal role in finance and is studied in a variety of contextsincluding the APT model of asset prices. Methods for the empirical evaluationof CAPM and APT are also discussed together with the volatility of assetprices the intertemporal CAPM and the equity premium puzzle. An analysis ofbond contracts leads into an assessment of theories of the term structure ofinterest rates. Finally financial derivatives are explored focusing onfutures and options contracts. «