The material in the pass course is extended in the honours lectures to a general equilibrium setting using the state-preference model of Arrow and Debreu. Also, the course examines the economics of insurance in the presence of asymmetric information where moral hazard and adverse selection problems arise. Reading: As for the pass course plus additional lecture handouts.

The course will provide students with a working knowledge of the classical finance model, which is the foundation for modern finance.  It establishes a foundation for examining the role of asymmetric information in financial markets.

Two examinable tutorials will be held during the semester, they are both fully redeemable.  The first one, which can contribute 10 per cent to the final grade, will be held just prior to the mid-semester break, while the second one, which can contribute 15 per cent, will be completed just after the mid-semester break.  The dates will be set two weeks in advance and will be announced in lectures and posted on WebCT.  A three (3) hour exam is held at the end of semester.

Lectures and tutorials as for the pass course plus one additional honours lecture per week.

ECON2101/2111 Microeconomics 2 (P or H).

Elton, E.J. and Gruber, M.J., Modern Portfolio Theory and Investment Analysis (5th edition), John Wiley and Sons, 1995
Hirschliefer, J., Investment, Interest, and Capital, Prentice Hall, 1970.

For further information please refer to http://ecocomm.anu.edu.au/courses/course.asp?code=ECON3016