This course will provide learners with theoretical foundations of modern financial economics.

CLO 1 Explain nature and scope of financial economics

CLO 2 Illustrate techniques and theories underpinning financial economics.

CLO 3 Design financial economic models and tools

CLO 4 Evaluate policies on portfolio planning and management

Introduction to Financial Economics: Financial Economics, Financial Markets, Institution & Trading Systems, Financial Markets, Financial Institutions, Financial Instruments, Trading Mechanisms, The Concept of Time Value of Money (TVM), Financial Statements

Introduction to Financial Planning, Analysing the resources of the person, Basic Concepts in Financial Planning, Financial Products for Savers, Financial Products for Investors, The Psychographics & Life Cycle of the Investor, Goal Achievement, Investment Objectives & Investment Constraints, Tax Planning

Financial Markets and Institutions: Financial Intermediation and the Economy, Financial Institutions, Asset Securitization, Role of Financial Markets in Africa’s Development

Asset markets and asset prices, Predictability of prices and market efficiency, Decision making under uncertainty, Portfolio selection: the mean-variance model, The capital asset pricing model (CAPM), The arbitrage pricing model (APT), Present value relationships and price volatility. Bond prices and the term structure of interest rates

Decision Making under Uncertainty (Expected utility representations, Risk aversion, Insurance premium; certainty equivalent wealth, Portfolio choice, Important utility functions, Global risk aversion),  Stochastic Dominance (Motivation, First order stochastic dominance), Mean-Variance Portfolio Analysis (Characterization of minimum variance portfolio, Properties of minimum variance portfolios, Portfolio Separation and the Capital Asset Pricing Model (CAPM), Arbitrage Pricing Theory, State-Contingent Claims (Pareto-optimal allocations, Complete markets economy and competitive.

Financial Derivatives: Financial Derivatives, Pricing of Derivatives, Hedging and Risk Management

Agency Problems and financial Contracting: Agency Theory, Agency Relationships Among Stakeholders, Financial Distress Costs and Agency Costs, Information Asymmetry and Financial Signalling, Corporate Governance

International Financial Markets: Parity Relations in Financial markets, International Portfolio diversification

Emerging Issue in Finance: Governance and Risk Management, financial market and Economic Development, regulation of financial markets, Capital markets, pension funds and insurance companies