ECON414 ECONOMICS OF FINANCIAL INVESTMENT
| Course Code: | 3110414 |
| METU Credit (Theoretical-Laboratory hours/week): | 3 (3.00 - 0.00) |
| ECTS Credit: | 6.0 |
| Department: | Economics |
| Language of Instruction: | English |
| Level of Study: | Undergraduate |
| Course Coordinator: | |
| Offered Semester: | Spring Semesters. |
Course Objectives
This course aims to give the necessary background and tools to students for understanding the workings of the financial investment markets. This includes understanding the capital allocation role of financial markets, facilitating flow of funds from savers to economic investors of the economy, pricing of financial assets in these markets and formation of optimal portfolios by financial investors that consists of these financial assets. To do so, the course covers basic concepts of financial investment, management of investment portfolios and pricing of assets in these portfolios. The concepts and definitions related to the different investment types, the markets in which the securities (debt, equity and derivatives) trade and to investment companies will be introduced. The risk/return trade-off and the concept of efficient markets will be explained. Overall financial investment process and the key elements involved in this process such as asset allocation and security selection will be discussed. The course will also cover theories of portfolio management and theories of asset pricing.
Course Content
The course covers basic concepts of financial investment, management of investment portfolios and pricing of assets in these portfolios. Topics include diversification, asset allocation, portfolio optimization, factor models, the relation between risk and return, mutual funds, performance evaluation as well as basic coverage of pricing and use of financial derivatives, including options, forwards and futures.
Course Learning Outcomes
A student completing this course successfully is expected to have fully grasp the role and workings of the financial markets, be competent in valuation of basic asset types, understand the management as well as formation and analysis of optimally diversified portfolios.