Subject Matter
Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance.
It studies the following:
- Valuation - Determination of the fair value of an asset
- How risky is the asset? (identification of the asset appropriate discount rate)
- What cash flows will it produce? (discounting of relevant cash flows)
- How does the market price compare to similar assets? (relative valuation)
- Are the cash flows dependent on some other asset or event? (derivatives, contingent claim valuation)
- Financial markets and instruments
- Commodities - topics
- Stocks - topics
- Bonds - topics
- Money market instruments- topics
- Derivatives - topics
- Financial institutions and regulation
Financial Econometrics is the branch of Financial Economics that uses econometric techniques to parameterise the relationships.
Read more about this topic: Financial Economics
Famous quotes containing the words subject and/or matter:
“Along with the lazy man ... the dying man is the immoral man: the former, a subject that does not work; the latter, an object that no longer even makes itself available to be worked on by others.”
—Michel de Certeau (1925–1986)
“It is not much matter which we say, but mind, we must all say the same.”
—William Lamb Melbourne, 2nd Viscount (1779–1848)