What is financial economics.
|
F |
inancial economics is the branch of economics characterized
by a "concentration on monetary activities", in which
"money of one type or another is likely to appear on both sides of a
trade". Its concern is thus the interrelation of financial variables,
such as prices, interest rates and shares, as opposed to those concerning
the real economy. It has two main areas of focus: asset pricing (or
"investment theory") and corporate finance; the first being the
perspective of providers of capital and the second of users of capital.
The subject is concerned with
"the allocation and deployment of economic resources, both spatially and
across time, in an uncertain environment".
It therefore centers on decision
making under uncertainty in the context of the financial markets, and the resultant
economic and financial models and principles, and is concerned with
deriving testable or policy implications from acceptable assumptions. It is
built on the foundations of microeconomics and decision theory.
Financial econometrics is the branch of
financial economics that uses econometric techniques to parameterize these
relationships. Mathematical finance is related in that it will derive and
extend the mathematical or numerical models suggested by financial economics.
Note though that the emphasis there is mathematical consistency, as
opposed to compatibility with economic theory.
Financial economics is usually taught
at the postgraduate level; see Master of Financial Economics. Recently,
specialist undergraduate degrees are offered in the discipline.
Visit
& Like our Social Pages:
Facebook: https://www.facebook.com/CapitalMiner
Follow on Twitter: https://twitter.com/sanjarvis1987
Follow me On Instagram:
Link- https://www.instagram.com/sanjarvis_india/
Subscribe our YouTube Channel
.jpeg)
