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The subject is a combination of principle and practice. It provides an overview of the economic principles governing financial markets; then provides insights into some important empirical and practical issues concerning the operation of financial markets; and concludes with a discussion of some practical issues associated with Australian financial markets.
Intended learning outcomes
- Explain and analyse the role of capital markets in consumption and investment decision-making under conditions of certainty and uncertainty.
- Explain how economic theory applies to financial markets.
- Describe how economic theory can provide testable restrictions on financial data.
- Analyse the main empirical results that have been established for financial markets.
- Critically evaluate economic policy issues associated with financial markets.
- Synthesise different theories and ideas, such as alternative models of asset pricing and portfolio allocation.
- Apply theories to the real world - how the shape of yield curves can be used to forecast inflation in Australia for example.
- Evaluate the relevance of competing theories. For instance, the extent to which alternative analyses can be used to predict the market price of different countries.
High level of development: written communication; problem solving; application of theory to practice; interpretation and analysis; critical thinking; synthesis of data and other information; evaluation of data and other information.
Moderate level of development: oral communication; collaborative learning; team work; statistical reasoning; accessing data and other information from a range of sources; receptiveness to alternative ideas.
Some level of development: use of computer software.
Last updated: 23 April 2022