ECON 2508 - Financial Economics II

North Terrace Campus - Semester 2 - 2020

This course is designed to provide both a self contained study of the principles of financial economics, and a bridge to higher level courses in economics and finance, including third year international finance. It includes a critical discussion of the efficient markets theory, an overview of quantitative methods in finance, considers risk aversion in the context of utility theory, examines portfolio theory, the Capital Asset Pricing Model and multi-factor asset pricing models, covers bond pricing, duration and convexity, behavioural finance theory, an introduction to the economics of financial crises, and introduces the top down approach to investment decisions. The emphasis is on a thorough coverage of modern finance theory as applied to investment analysis, balanced with a consideration of new developments in the discipline, and of the application of both old and new theoretical perspectives to understand the current environment for financial investment decisions.

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Course Details

Course Code	ECON 2508
Course	Financial Economics II
Coordinating Unit	Economics
Term	Semester 2
Level	Undergraduate
Location/s	North Terrace Campus
Units	3
Contact	Up to 3 hours per week
Available for Study Abroad and Exchange	Y
Assumed Knowledge	ECON 1009 or ECON 1012
Quota	A quota will apply
Assessment	Typically, objective tests (multiple choice), an individual and a group assignment, and final exam

Course Staff

Course Coordinator: Dr Steven Hail

Office hours: To be advised

Office location: Nexus 10, Level 3, Room 3.34

Course Timetable

The full timetable of all activities for this course can be accessed from .

Course Learning Outcomes

On successful completion of this course, students will be able to:

Apply utility theory to describe and analyze investment decisions under risk aversion.
Describe and apply modern portfolio theory.
Describe, apply and criticize single and multiple factor models of risk and return.
Describe, apply, compare and criticize the efficient markets hypothesis and behavioural finance theory.
Identify and describe the risks of managing portfolios of fixed income securities.
Describe and explain the causes of financial instability and financial crises.

University Graduate Attributes

This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

University Graduate Attribute	Course Learning Outcome(s)
Deep discipline knowledge informed and infused by cutting edge research, scaffolded throughout their program of studies acquired from personal interaction with research active educators, from year 1 accredited or validated against national or international standards (for relevant programs)	1-6
Critical thinking and problem solving steeped in research methods and rigor based on empirical evidence and the scientific approach to knowledge development demonstrated through appropriate and relevant assessment	1-6
Teamwork and communication skills developed from, with, and via the SGDE honed through assessment and practice throughout the program of studies encouraged and valued in all aspects of learning	1-6
Career and leadership readiness technology savvy professional and, where relevant, fully accredited forward thinking and well informed tested and validated by work based experiences	1-6
Intercultural and ethical competency adept at operating in other cultures comfortable with different nationalities and social contexts able to determine and contribute to desirable social outcomes demonstrated by study abroad or with an understanding of indigenous knowledges	1-6
Self-awareness and emotional intelligence a capacity for self-reflection and a willingness to engage in self-appraisal open to objective and constructive feedback from supervisors and peers able to negotiate difficult social situations, defuse conflict and engage positively in purposeful debate	1-6

Learning Resources

Required Resources

Bodie, Drew, Basu, Kane and Marcus
Principles of Investments
McGraw Hill Higher Education, 2013

Students also require a financial calculator (or other calculator with financial functions). A model will be recommended by the lecturer during week one.

Recommended Resources

Additional materials will be recommended on the MyUni site.

Online Learning

A number of links to additional readings will be posted on MyUni, alongside lecture recordings and other materials.

Learning & Teaching Modes

Students in this course are expected to attend all lectures throughout the semester plus one tutorial class each week. The problem-solving tutorials support the lectures, and prepare students for their mid-term and final examinations.

Tutorials will be held weekly commencing the second week of the semester. Membership of tutorial classes is to be finalised by the end of the second week of semester. Students wishing to swap between tutorial classes after this time are required to present their case to the tutor-in-charge, but should be aware that such a request may not be approved.

Tutorials are an important component of your learning in this course. The communication skills developed in tutorials by regularly and actively participating in discussions are considered to be most important by the School and are highly regarded by employers and professional bodies.

Workload

The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

The University expects full-time students (i.e. those taking 12 units per semester) to devote a total of 48 hours per week to their studies. This means that, for this course, you are expected to commit approximately 9 hours to private study, that is, study outside of your regular classes.

Learning Activities Summary

Teaching & Learning Activities	Related Learning Outcomes
Lectures	1-6
Tutorials	1-6

Learning Activities Schedule

Week	Lecture Topic	Essential Reading	Tutorials
1	Introduction to Financial Economics	Bodie et al Cha 1&2	No Tutorial
2	Risk and Risk Aversion	Bodie et al Cha 5	Set 1
3	The Capital Allocation Decision	Bodie et al Cha 6	Set 2
4	Optimal Risky Portfolios	Bodie et al Cha 6	Set 3
5	The Capital Asset Pricing Model and its Limitations	Bodie et al Cha 7	Set 4
6	Multi-Factor Models of Risk and Return	Bodie et al Cha 7	Set 5
7	The (In)Efficient Markets Hypothesis	Bodie et al Cha 8	Set 6
8	Behavioural Finance and Prospect Theory	Bodie et al Cha 8	Set 7
9	Bond Yields and Interest Rate Risk	Bodie et al Cha 9	Set 8
10	Managing Bond Portfolios	Bodie et al Cha 10	Set 9
11	Macroeconomic and Industry Analysis	Bodie et al Cha 12	Set 10
12	Financial Instability	Reading provided via myUni	Set 11

The University's policy on Assessment for Coursework Programs is based on the following four principles:

Assessment must encourage and reinforce learning.
Assessment must enable robust and fair judgements about student performance.
Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
Assessment must maintain academic standards.

Assessment Summary

Assessment Task	Due Date/ Week	Weighting	Course Learning Outcomes
Three Objective Tests (Multiple-choice)	Week 5/9/12	15%	1-6
Technical Assignment	Week 5	10%	1
Solver Assignment	Week 9	15%	2
Written Assignment	Week 12	20%	3-6
Final Exam	End of course	40%	1-6
Total		100%

Assessment Related Requirements

The minimum grade to pass this subject is a mark of 50% overall. There are no separate requirements for individual assessments.

Assessment Detail

Assessment 1: Online Tests Total
Weighting: 15%
Online test 1: Weighting 5%
        Week 5
        15 multiple choice questions
        40 minutes duration
        Covers topic 1 – 4
        Learning Outcomes: 1-2.

Online test 2: Weighting 5%
        Week 9
        15 multiple choice questions
        40 minutes duration
        Covers topic 5 – 8
        Learning Outcomes: 2-4.

Online test 3: Weighting 5%
        Week 12
        15 multiple choice questions
        40 minutes duration
        Covers topic: 9 – 11
        Learning Outcomes: 4-6.

Assessment 2: Technical Assignment
Weighting: 10%
Published in Week 1, this will be a mainly technical assignment.
To be submitted on line by the end of Week 5
To be returned to you by the end of Week 7
Learning Outcomes: 1.

Assessment 3: Solver Assignment
Weighting: 15%
Published by Week 4. It will involve the use of Solver to identify an ‘efficient’ portfolio of risky assets. Students will be required to watch a video which will be published on MyUni explaining the process of using Solver. The main part of the assignment will involve the application of utility theory, portfolio theory and the theory of portfolio selection.
To be submitted on line by the end of Week 9
To be returned to you by the end of Week 11
Learning Outcomes: 2.

Assessment 4: Written Assignment
Weighting: 20%
Published by Week 8. It will involve the analysis of macroeconomic policy, financial markets and financial instability during current economic conditions. It will take the form of an essay or written report.
To be submitted on line by the end of Week 12
This written assignment will be graded at the same time as the final examination.
Learning Outcomes: 3-6.

Assessment 5: Final Examination
Weighting: 40%
Supervised, Open Book, On Line:
The exam will comprise some objective test questions and longer written/problem questions.
Date: Please refer to the examination timetable for details of exam day and time.
Learning Outcomes: 1-6.

Submission

Assignment submission details will be published on MyUni at the beginning of the course. Assignments will normally be marked and returned to students within 3 weeks of submission.

Late submission & absences
Missing a test will result in a zero score unless the lecturer is supplied (within 5 working days from the date of the test) with documentary evidence of the reason for non-attendance such as a medical certificate or letter from your employer. Problem sets and assignments submitted late will not be accepted unless accompanied by documentary evidence (as above). If a student misses a tutorial and has documentary evidence (as above) they should consult with their tutor who will adjust their marks accordingly. Note that merely being at work is not considered as reasonable grounds for missing a test or tutorial. A conference or interstate trip may be reason enough.

Course Grading

Grades for your performance in this course will be awarded in accordance with the following scheme:

M10 (Coursework Mark Scheme)
Grade	Mark	Description
FNS		Fail No Submission
F	1-49	Fail
P	50-64	Pass
C	65-74	Credit
D	75-84	Distinction
HD	85-100	High Distinction
CN		Continuing
NFE		No Formal Examination
RP		Result Pending

Further details of the grades/results can be obtained from Examinations.

Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

Final results for this course will be made available through .

Student Feedback

The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.
Student Support
Policies & Guidelines
This section contains links to relevant assessment-related policies and guidelines - all university policies.
Fraud Awareness

Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student鈥檚 disciplinary procedures.

The 成人大片 is committed to regular reviews of the courses and programs it offers to students. The 成人大片 therefore reserves the right to discontinue or vary programs and courses without notice. Please read the important information contained in the disclaimer.

Authorised by:	Deputy Vice-Chancellor and Vice-President (Academic)
Maintained by:	Course Outlines Administrator

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