Financial Economics

This information is for the 2020/21 session.

Teacher responsible

Prof Ian Martin, Dr Igor Makarov and Prof Michael Burkart


This course is compulsory on the MRes/PhD in Accounting (EoA) (Economics of Accounting Track) , MRes/PhD in Finance, MSc in Finance and Economics and MSc in Finance and Economics (Work Placement Pathway). This course is not available as an outside option.


Mathematical background at the level of the September Courses in Mathematics and Financial Economics Preparatory Course is assumed.

Course content

Financial Economics provides students with an in-depth introduction to the theories of asset pricing and corporate finance. The course analyses investors’ behaviour, market equilibrium, the pricing of securities, the valuation of real assets, and capital structure choice. Topics in asset pricing will encompass portfolio choice, complete and incomplete markets, mean-variance portfolio theory and equilibrium asset pricing, pricing with no arbitrage, Black-Scholes and other contingent claims pricing models, and the behaviour of financial markets during crises. Topics in corporate finance will encompass valuation methods and financing decisions in the presence of taxation, agency frictions, and asymmetric information.


60 hours of lectures in the MT.

This course is taught in the interactive lecturing format. There is no distinction between lectures and classes/seminars; there are “sessions” only, and the pedagogical approach in each session is interactive.

Formative coursework

Problem sets, covered in classes.

Indicative reading

Readings will be based on teaching notes and journal articles.


Exam (80%, duration: 3 hours, reading time: 15 minutes) in the summer exam period.
Coursework (20%).

Important information in response to COVID-19

Please note that during 2020/21 academic year some variation to teaching and learning activities may be required to respond to changes in public health advice and/or to account for the situation of students in attendance on campus and those studying online during the early part of the academic year. For assessment, this may involve changes to mode of delivery and/or the format or weighting of assessments. Changes will only be made if required and students will be notified about any changes to teaching or assessment plans at the earliest opportunity.

Key facts

Department: Finance

Total students 2019/20: 60

Average class size 2019/20: 55

Controlled access 2019/20: Yes

Value: One Unit

Guidelines for interpreting course guide information

Personal development skills

  • Problem solving
  • Application of numeracy skills
  • Specialist skills