Financial Economics Descriptions

Errata
Item Errata Date
1.

Co-requisites have been removed for the following units of study:

ECOS2901 Intermediate Microeconomics Honours

21/6/2019

Financial Economics

Major

A major in Financial Economics requires 48 credit points from this table including:
(i) 12 credit points of 1000-level core units
(ii) 12 credit points of 2000-level core units
(iii) Students in the Bachelor of Economics program are prohibited from ECOS2040
(iv) Students who have completed ECOS2001/ECOS2901 and/or ECOS2002/ECOS2902 are prohibited from ECOS2040
(v) 6 credit points of 3000-level core units
(vi) 18 credit points of 3000-level selective units, including 6 credit points of Interdisciplinary Project units

Minor

A minor in Financial Economics requires 36 credit points from this table including:
(i) 12 credit points of 1000-level units
(ii) 12 credit points of 2000-level units
(iii) Students in the Bachelor of Economics are prohibited from ECOS2040
(iv) Students who have completed ECOS2001/ECOS2901 and/or ECOS2002/ECOS2902 are prohibited from ECOS2040
(v) 6 credit points of 3000-level core units
(vi) 6 credit points of 3000-level selective units

1000 level units of study

ECMT1010 Introduction to Economic Statistics

Credit points: 6 Session: Semester 1,Semester 2 Classes: 1x2hr lecture/week, 1x2hr workshop/week Prohibitions: ECMT1011 or ECMT1012 or ECMT1013 or MATH1015 or MATH1005 or MATH1905 or STAT1021 or ECOF1010 or BUSS1020 or ENVX1001 or DATA1001 Assumed knowledge: Students enrolled in this unit have an assumed knowledge equal to or exceeding 70 or higher in HSC Mathematics (or equivalent), or 35 or higher in HSC Mathematics Extension 1 (or equivalent), or 35 or higher in HSC Mathematics Extension 2 (or equivalent). Assessment: homework (15%), quizzes (30%), assignment (15%) and 1x2hr Final exam (40%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
This unit emphasises understanding the use of computing technology for data description and statistical inference. Both classical and modern statistical techniques such as bootstrapping will be introduced. Students will develop an appreciation for both the usefulness and limitations of modern and classical theories in statistical inference. Computer software (e.g., Excel, StatKey) will be used for analysing real datasets.
ECON1001 Introductory Microeconomics

Credit points: 6 Session: Intensive January,Semester 1,Semester 2 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prohibitions: BUSS1040 or ECON1040 Assumed knowledge: Students enrolled in this unit have an assumed knowledge equal to or exceeding 70 or higher in HSC Mathematics (or equivalent), or 35 or higher in HSC Mathematics Extension 1 (or equivalent), or 35 or higher in HSC Mathematics Extension 2 (or equivalent). Assessment: online quizzes (10%), 1xMid-semester test (30%), 1xEssay (10%) and 1x2hr Final exam (50%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
Introductory Microeconomics addresses the economic decisions of individual firms and households and how these interact in markets. It is a compulsory core unit for the Bachelor of Economics and an alternative core unit for the Bachelor of Economic and Social Science. Economic issues are pervasive in contemporary Australian society. Introductory Microeconomics introduces students to the language and analytical framework adopted in Economics for the examination of social phenomena and public policy issues. Whatever one's career intentions, coming to grips with economic ideas is essential for understanding society, business and government. Students are given a comprehensive introduction to these ideas and are prepared for the advanced study of microeconomics in subsequent years. It is assumed that students undertaking this unit will have a prior knowledge of mathematics.

2000 level units of study

ECMT2130 Financial Econometrics

Credit points: 6 Session: Semester 2 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: ECMT2110 or ECMT2010 or ECMT1020 Prohibitions: ECMT2030 Assessment: 2x assignments (2x20%) and 1x2hr Final exam (60%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
Over the last decade econometric modelling of financial data has become an important part of the operations of merchant banks and major trading houses and a vibrant area of employment for econometricians. This unit provides an introduction to some of the widely used econometric models for financial data and the procedures used to estimate them. Special emphasis is placed upon empirical work and applied analysis of real market data. Topics covered may include the statistical characteristics of financial data, the specification, estimation and testing of asset pricing models, the analysis of high frequency financial data, and the modelling of volatility in financial returns.
ECOS2001 Intermediate Microeconomics

Credit points: 6 Session: Intensive January,Semester 1,Semester 2 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: ECON1001 or BUSS1040 or ECON1040 Prohibitions: ECON2001 or ECON2901 or ECOS2901 Assessment: Tutorial participation (10%), 2x in-class tests (40%) and 2hr Final exam (50%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
Note: Certain combinations of Maths/Stats may substitute for Econometrics. Consult the School of Economics Undergraduate Coordinator.
The aim of Intermediate Microeconomics is the development of theoretical and applied skills in economics. It covers applications and extensions of the theory of consumer choice, firm behaviour and market structure. Emphasis is given to the economics of information and choice under uncertainty; industry structures other than monopoly and perfect competition; markets for factors of production; general equilibrium and economic efficiency; market failure and the role of government. This unit provides a basis for the more specialised options that comprise third year economics.
Or
ECOS2901 Intermediate Microeconomics Honours

Credit points: 6 Session: Semester 1 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: (ECON1001 or BUSS1040 or ECON1040) with a minimum Distinction grade (75%) Corequisites: (ECOS2903 or MATH2070) and (ECMT1010 or BUSS1020 or MATH1905 or MATH1005 or MATH1015) Prohibitions: ECOS2001 or ECON2001 or ECON2901 Assessment: 2x Mid-semester tests (50%) and 2.5hr Final exam (50%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
Note: Department permission required for enrolment
This unit is comprised of lectures based upon the curriculum for ECOS2001 Intermediate Microeconomics, supported by a seminar for one hour a week. The content of lectures reflect a more analytical and critical treatment of the topics than ECOS2001. The topics, which build on the theory of consumer and firm behaviour and market structure, include game theory, oligopoly, general equilibrium and welfare, externalities and public goods and the economics of information.
Or
ECOS2040 Intermediate Financial Economics

Credit points: 6 Session: Semester 2 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: ECON1001 and ECMT1010 Prohibitions: ECOS2001 or ECOS2901 or ECOS2002 or ECOS2902 Assessment: 1x2hr Final exam (50%), 2x1hr Mid-semester test (50%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
This unit introduces micro- and macroeconomic models central for understanding the functioning of financial markets. Models of intertemporal choice and investment decisions provide a foundation for an understanding of asset pricing. The role financial institutions, regulators and money in explaining economic growth and the business cycle are examined.

3000 level units of study

Core
ECOS3022 The Economics of Financial Markets

Credit points: 6 Session: Semester 1 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: (ECOS2001 or ECOS2901) and (ECOS2002 or ECOS2902) Assessment: problem sets (20%), Mid-semester test (25%) and 2hr Final exam (55%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
Financial assets play a vital role coordinating the actions of savers and investors; consequently, they play a crucial role in creating wealth and facilitating economic activity. The aim of this unit is to explore the economic principles underlying: the pricing and development of financial assets; the trade-off between risk and return and the how investors construct portfolios in response to this trade-off. The focus is on the economics of financial markets: the factors of demand and supply; risk and uncertainty; incomplete contracts and renegotiation; and asymmetric information and its implications. We will emphasize the key aspects of markets for financial assets and the main differences to markets for consumption goods. The unit also examines the development of financial institutions and current issues in financial markets.
Selective
ECMT3130 Forecasting for Economics and Business

Credit points: 6 Session: Semester 2 Classes: 1x2hr lecture/week, 1x1hr lab/week Prerequisites: ECMT2110 or ECMT2010 or (ECMT2150 and ECMT2160) Prohibitions: ECMT3030 Assessment: assignment (20%), group assignment (25%), Mid-semester test (20%) and 2.5hr Final exam (35%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
The need to forecast or predict future values of economic time series arises frequently in many branches of applied economic and commercial work. It is, moreover, a topic which lends itself naturally to econometric and statistical treatment. The specific feature which distinguishes time series from other data is that the order in which the sample is recorded is of relevance. As a result of this, a substantial body of statistical methodology has developed. This unit provides an introduction to methods of time series analysis and forecasting. The material covered is primarily time domain methods designed for a single series and includes the building of linear time series models, the theory and practice of univariate forecasting and the use of regression methods for forecasting. Throughout the unit a balance between theory and practical application is maintained.
ECMT3150 The Econometrics of Financial Markets

Credit points: 6 Session: Semester 1 Classes: 1x2hr lecture/week, 1x1hr lab/week Prerequisites: ((ECMT1010 or BUSS1020 or MATH1905 or MATH1005 or MATH1015) and (ECMT2110 or ECMT2010) and (ECMT2130 or ECMT2030)) or (ECMT2130 and ECMT2150 and ECMT2160) Prohibitions: ECMT3050 Assessment: assignment (20%), group assignment (30%), Mid-semester test (15%) and 2.5hr Final exam (35%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
This unit studies and develops the econometric models and methods employed for the analysis of data arising in financial markets. It extends and complements the material covered in ECMT2130. The unit will cover econometric models that have proven useful for the analysis of both synchronous and non-synchronous financial time series data over the last two decades. Modern Statistical methodology will be introduced for the estimation of such models. The econometric models and associated methods of estimation will be applied to the analysis of a number of financial datasets. Students will be encouraged to undertake hands-on analysis using an appropriate computing package. Topics covered include: Discrete time financial time series models for asset returns; modelling and forecasting conditional volatility; Value at Risk and modern market risk measurement and management; modelling of high frequency and/or non-synchronous financial data and the econometrics of market microstructure issues. The focus of the unit will be in the econometric models and methods that have been developed recently in the area of financial econometrics and their application to modelling and forecasting market risk measures.
ECOS3007 International Macroeconomics

Credit points: 6 Session: Semester 1 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: ECOS2002 or ECOS2902 Assessment: assignments (20%) and Mid-semester test (20%) and 1x2hr Final exam (60%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
This unit studies macroeconomic theory and policy in a global trading world. The microfoundations of the various sectors are examined in the context of an open economy. The evolution of international money and capital markets is described, the operation of the foreign exchange market is examined, showing how its microstructure affects its macro performance. Theories and tests of the efficiency of international capital markets are surveyed, as well as core theories and tests of exchange rate and asset price determination. The unit develops the macroeconomic implications of monetary and fiscal policies for small and large open economies for different regimes.
ECOS3010 Monetary Economics

Credit points: 6 Session: Semester 1 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: ECOS2001 or ECOS2901 or ECOS2002 or ECOS2902 Prohibitions: ECON3010 Assessment: multiple choice test (30%) and written paper (20%) and 70min Final exam (50%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
This unit provides an overview of the main elements of monetary economics, with emphasis upon macroeconomic issues - analysis of economic processes in which money enters the picture in an essential manner. The content primarily concerns economic principles and theory, but there is also considerable focus on the Australian monetary system and monetary policy in particular. The particular topics covered include: functions of money; the concept of 'liquidity'; money demand; determinants of money supply changes; financial crises and the 'lender of last resort' function of central banking; the Reserve Bank of Australia and the Australian Prudential Regulation Authority; term and risk structures of interest rates; alternative theories of the level of the rate of interest; the monetary policy transmission mechanism; monetary policy instrument choice; central bank credibility; policy reaction functions; the global monetary system; and Reserve Bank market operations.
ECOS3021 Business Cycles and Asset Markets

Credit points: 6 Session: Semester 1 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: (ECOS2001 or ECOS2901) and (ECOS2002 or ECOS2902) Assessment: 1x1hr Mid-semester test (25%), 1x1000wd Empirical report (25%), 1x2hrExam (50%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
The unit of study provides theoretical and empirical training in analysing macroeconomic fluctuations and the interactions between the real economy and asset markets. The unit of study will introduce theoretical models of the business cycle to identify sources of economic fluctuations. It then provides a theoretical framework in which the asset market-the real economy can be analysed. In addition to theoretical analysis, the unit will develop empirical tools for analysing economic and financial indicators as well as evaluating the performance of theoretical models. The role of government policy will also be discussed by taking both Australian and global episodes.
ECOS3025 The Economics of Regulation

Credit points: 6 Session: Semester 1 Classes: 1x2hr lecture/week, 1x1hr tutorial/week Prerequisites: ECOS2001 or ECOS2901 Assessment: 500wd equivalent problem sets (10%), 1x1.5hr mid-semester test (40%), 1x2hr final exam (50%) Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
Market outcomes can be undesirable when self-interested firms reduce welfare for consumers and society. This unit of study focuses on the regulation of firms in markets with imperfect competition. We analyse regulation of natural monopolies, focusing on the key issue of asymmetric information between the regulator and the monopolist. In this unit we also examine oligopoly markets in which firms can reduce welfare through collusion, price fixing and vertical restraints. Emphasising real-world examples, we examine competition policy and merger regulation.

Interdisciplinary Project units of study

ECON3998 Industry and Community Project

Credit points: 6 Session: Intensive December,Intensive February,Intensive January,Intensive July,Semester 1,Semester 2 Prerequisites: Interdisciplinary Impact in any major Mode of delivery: Normal (lecture/lab/tutorial) day Faculty: Arts and Social Sciences
This unit is designed for third year students to undertake a project that allows them to work with one of the University's industry and community partners. Students will work in teams on a real-world problem provided by the partner. This experience will allow students to apply their academic skills and disciplinary knowledge to a real-world issue in an authentic and meaningful way.
A specific interdisciplinary unit for this major commences in 2020. In 2019, the alternative interdisciplinary project units of study available within the major are one of the following: ECOS3022 or ECOS3008 or ECOS3013 or ECOS3017 or ECOS3022.