- Class Number 7061
- Term Code 3160
- Class Info
- Unit Value 6 units
- Mode of Delivery In Person
- AsPr Patrick Beissner
- Class Dates
- Class Start Date 26/07/2021
- Class End Date 29/10/2021
- Census Date 14/09/2021
- Last Date to Enrol 02/08/2021
This course examines the economic principles that determine the allocation of resources through time in market economies. It uses supply and demand relationships to value capital assets (or projects more generally). There is a detailed treatment of the effects of risk and taxes on capital asset prices, and the Modigliani-Miller financial policy irrelevance theorems are derived and examined in detail. The impact of modern contracting theory on our understanding of financial economics will also be discussed.
Upon successful completion, students will have the knowledge and skills to:
- be exposed to the classical finance model that underpins modern finance;
- understand how securities are priced and affected by the institutional arrangements in securities markets, including taxes and other government regulations,
- understand the role played by time, uncertainty, information and inflation in evaluating financial instruments;
- know the role played by arbitrage in finance markets and its impact on security prices;
- understand how security prices are determined in the Capital Asset Pricing Model, and the role played by the assumptions in the model;
- know the assumptions behind the the Modigliani and Miller (M-M) financial policy irrelevance theorems as basis for understanding the factors that determine the debt-equity and dividend policy choices of firms.
- understand to the role of asymmetric information in various financial markets.
- understand how contractual incompleteness can impact corporate financial decisions.
The material taught in this course is directly relevant to pricing derivatives and macro finance that have been considered by economists in academia, and the financial industry.
Additional Course Costs
Lengwiler, Yvan. Microfoundations of financial economics: an introduction to general equilibrium asset pricing. Princeton: Princeton University Press, 2004.
The book is available free online: https://pdfs.semanticscholar.org/2ad2/69e4ba8001b9fdd9323dfd1d548751d79860.pdf
Students will be given feedback in the following forms in this course:
- written comments
- verbal comments
- feedback to whole class, groups, individuals, focus group etc
ANU is committed to the demonstration of educational excellence and regularly seeks feedback from students. Students are encouraged to offer feedback directly to their Course Convener or through their College and Course representatives (if applicable). The feedback given in these surveys is anonymous and provides the Colleges, University Education Committee and Academic Board with opportunities to recognise excellent teaching, and opportunities for improvement. The Surveys and Evaluation website provides more information on student surveys at ANU and reports on the feedback provided on ANU courses.
|Week/Session||Summary of Activities||Assessment|
|1||Week 1-3: Financial Assets, Basic Concepts in Finance and Utility under Risk and Maximization||Chapter 2, 4 and 8.2; Problem Set 1 due week 3|
|2||Week 4-6: Arrow Debreu/Radner Economies, Risk Neutral Probabilities, CAPM||Chapter 3|
|3||Week 7-9: Static and dynamic Finance, CCAPM||Chapter 5; Problem Set 2 due week 9|
|4||Week 10-12: Dynamic Finance, Puzzles and Extensions||Chapter 6,7|
Tuturioals will be pre recorded, details will be provided on Wattle in O-week.
|Assessment task||Value||Due Date||Return of assessment||Learning Outcomes|
|Take home problem set I||15 %||11/08/2021||20/08/2021||1|
|Exam 1 - Midtern||15 %||*||*||2|
|Take home problem set II||15 %||06/10/2021||20/08/2021||3|
|Exam 2 (final)||55 %||*||*||1,2,3,4|
* If the Due Date and Return of Assessment date are blank, see the Assessment Tab for specific Assessment Task details
ANU has educational policies, procedures and guidelines, which are designed to ensure that staff and students are aware of the University’s academic standards, and implement them. Students are expected to have read the Academic Misconduct Rule before the commencement of their course. Other key policies and guidelines include:
The ANU is using Turnitin to enhance student citation and referencing techniques, and to assess assignment submissions as a component of the University's approach to managing Academic Integrity. For additional information regarding Turnitin please visit the Academic Integrity . In rare cases where online submission using Turnitin software is not technically possible; or where not using Turnitin software has been justified by the Course Convener and approved by the Associate Dean (Education) on the basis of the teaching model being employed; students shall submit assessment online via ‘Wattle’ outside of Turnitin, or failing that in hard copy, or through a combination of submission methods as approved by the Associate Dean (Education). The submission method is detailed below.
Moderation of Assessment
Marks that are allocated during Semester are to be considered provisional until formalised by the College examiners meeting at the end of each Semester. If appropriate, some moderation of marks might be applied prior to final results being released.
This is a remote course. There will be opportunity for student to engage with teaching staff. Further details will be made available on wattle.
Assessment Task 1
Learning Outcomes: 1
Take home problem set I
In week 3 a problem set will be delivered through wattle. They will cover material from the preceeding 3 weeks lectures and tutorials. More information will be provided on the Wattle course site in week 2.
Form: Student's solutions need to be uploaded via Wattle. Corrected solutions will be uploaded on Wattle.
Assessment Task 2
Learning Outcomes: 2
Exam 1 - Midtern
This will cover material from weeks 1-6 lectures and tutorials. More information will be provided on wattle two weeks before the exam.
Form: The form will be a up to 5 pages "mini paper", submission will be at the beginning of Week 7 with approx 2 weeks time for submission..
Student's solutions need to be uploaded via Wattle. Corrected solutions will be uploaded on Wattle.
Assessment Task 3
Learning Outcomes: 3
Take home problem set II
In week 9 a problem set will be delivered through wattle. They will cover material from the preceeding 3 weeks lectures and tutorials. More details will be provided on Wattle in week 8.
Form: Student's solutions need to be uploaded via Wattle. Corrected solutions will be uploaded on Wattle.
Assessment Task 4
Learning Outcomes: 1,2,3,4
Exam 2 (final)
This will cover material from weeks 1-12 lectures and tutorials.
This will be held during the ANU Exam block at the end of the semester.
The exam will be delivered online.
More information around week 10.
written exam Duration approx 210min
Academic integrity is a core part of the ANU culture as a community of scholars. At its heart, academic integrity is about behaving ethically, committing to honest and responsible scholarly practice and upholding these values with respect and fairness.
The ANU commits to assisting all members of our community to understand how to engage in academic work in ways that are consistent with, and actively support academic integrity. The ANU expects staff and students to be familiar with the academic integrity principle and Academic Misconduct Rule, uphold high standards of academic integrity and act ethically and honestly, to ensure the quality and value of the qualification that you will graduate with.
The Academic Misconduct Rule is in place to promote academic integrity and manage academic misconduct. Very minor breaches of the academic integrity principle may result in a reduction of marks of up to 10% of the total marks available for the assessment. The ANU offers a number of online and in person services to assist students with their assignments, examinations, and other learning activities. Visit the Academic Skills website for more information about academic integrity, your responsibilities and for assistance with your assignments, writing skills and study.
You will be required to electronically sign a declaration as part of the submission of your assignment. Please keep a copy of the assignment for your records. Unless an exemption has been approved by the Associate Dean (Education) submission must be through Turnitin.
For some forms of assessment (hand written assignments, art works, laboratory notes, etc.) hard copy submission is appropriate when approved by the Associate Dean (Education). Hard copy submissions must utilise the Assignment Cover Sheet. Please keep a copy of tasks completed for your records.
Individual assessment tasks may or may not allow for late submission. Policy regarding late submission is detailed below:
- Late submission not permitted. If submission of assessment tasks without an extension after the due date is not permitted, a mark of 0 will be awarded.
- Late submission permitted. Late submission of assessment tasks without an extension are penalised at the rate of 5% of the possible marks available per working day or part thereof. Late submission of assessment tasks is not accepted after 10 working days after the due date, or on or after the date specified in the course outline for the return of the assessment item. Late submission is not accepted for take-home examinations.
Accepted academic practice for referencing sources that you use in presentations can be found via the links on the Wattle site, under the file named “ANU and College Policies, Program Information, Student Support Services and Assessment”. Alternatively, you can seek help through the Students Learning Development website.
Extensions and Penalties
Extensions and late submission of assessment pieces are covered by the Student Assessment (Coursework) Policy and Procedure. Extensions may be granted for assessment pieces that are not examinations or take-home examinations. If you need an extension, you must request an extension in writing on or before the due date. If you have documented and appropriate medical evidence that demonstrates you were not able to request an extension on or before the due date, you may be able to request it after the due date.
Distribution of grades policy
Academic Quality Assurance Committee monitors the performance of students, including attrition, further study and employment rates and grade distribution, and College reports on quality assurance processes for assessment activities, including alignment with national and international disciplinary and interdisciplinary standards, as well as qualification type learning outcomes.
Since first semester 1994, ANU uses a grading scale for all courses. This grading scale is used by all academic areas of the University.
Support for students
The University offers students support through several different services. You may contact the services listed below directly or seek advice from your Course Convener, Student Administrators, or your College and Course representatives (if applicable).
- ANU Health, safety & wellbeing for medical services, counselling, mental health and spiritual support
- ANU Diversity and inclusion for students with a disability or ongoing or chronic illness
- ANU Dean of Students for confidential, impartial advice and help to resolve problems between students and the academic or administrative areas of the University
- ANU Academic Skills and Learning Centre supports you make your own decisions about how you learn and manage your workload.
- ANU Counselling Centre promotes, supports and enhances mental health and wellbeing within the University student community.
- ANUSA supports and represents undergraduate and ANU College students
- PARSA supports and represents postgraduate and research students