Syllabus%20Fin%20Ec%20Fall%202010%202010-08-20

Syllabus%20Fin%20Ec%20Fall%202010%202010-08-20 - Revised:...

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Revised: August 20, 2010 1 UNIVERSITY OF ILLINOIS AT URBANA-CHAMPAIGN College of Business Department of Finance Finance 501: Financial Economics SYLLABUS Fall 2010 Professor: Nolan Miller Office: 4033 BIF Office hours: Tuesday/Thursday 4:00 – 5:00 Phone: 244-2847 http://compass.illinois.edu Email: nmiller@illinois.edu SECTIONS AND ROOMS: SECTION DAYS TIME LOCATION FE Tues./Thurs. 8:00 – 9:20 240 Wohlers MS1 Tues./Thurs. 9:30 – 10:50 240 Wohlers MS2 Tues./Thurs. 12:30 – 1:50 3007 BIF There will also be occasional, optional sessions on Fridays, conducted by the teaching assistant. These sessions will take place in 240 Wohlers Hall from 10:00 – 11:50. NOTE: the sessions may be divided into two 50 minute presentations of the same material. The review sessions will be led by the teaching assistant, Nasrin Sarrafi, who can be contacted at sarrafi@uiuc.edu. COURSE OBJECTIVES: Microeconomics is the intellectual foundation for the field of finance. This course is designed to give you a strong understanding of the theory and logic of microeconomics. We will discuss the standard models of how consumers and producers behave, and the implications of these models for resource allocation and market efficiency. We will also discuss the basic tools of microeconomics, including optimization, comparative statics and equilibrium. Applications to finance will be highlighted throughout the course, and special attention will be paid to how the tools of economics can be applied to problems in finance and business more generally. The course is divided into four parts. The first part (Markets) focuses on the fundamentals of markets and why, under ideal circumstances, markets allocate resources efficiently. We will also focus on applications of this material to finance, with particular emphasis on the economics of time and risk. The second part (Market Failures) considers departures from ideal circumstances and how such departures can lead to inefficiencies. Such inefficiencies are often the targets of financial innovations (e.g. new securities) that aim to reduce the magnitude of the market failure and have the dual benefit of reducing inefficiency and improving profit. The final two parts look at situations to which the theory of competitive markets is less applicable. The third part considers game theory and strategy, which applies to situations where there are a small number of actors. The fourth part briefly considers basic issues in macroeconomics. AUDIENCE: This is a required course for students in the MSF and MSFE programs. A limited
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Revised: August 20, 2010 2 number of graduate students from other programs may be admitted with consent of the instructor. Non-MSF/E students should contact me as soon as possible. PRE-REQUISITES:
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Syllabus%20Fin%20Ec%20Fall%202010%202010-08-20 - Revised:...

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