This course covers the fundamentals of financial economics, including asset pricing, returns, present value, and capital budgeting, along with concepts such as interest rates, inflation, and risk. It also explores portfolio theory, exchange rates, derivatives and option pricing, and models like CAPM and APT, with a focus on decision-making under uncertainty and market efficiency.

Lectures-Tutorials-Practicals-Credits: 4-0-0-4

Week 1: Asset pricing fundamentals; Financial markets; Asset bubbles and crises; Structured finance and credit ratings.

Week 2: Returns and time value of money; Present and future value; Net present value; Asset market applications.

Week 3: Present value concepts; Capital budgeting rules; Time-varying rates of return.

Week 4: Bonds and interest rates; Maturity and duration; Inflation; Yield curve analysis.

Week 5: Credit risk and interest rates; Capital budgeting under uncertainty; Debt vs equity; Decision-making under uncertainty.

Week 6: Decision-making under certainty and uncertainty; Risky assets and expected returns.

Week 7: Portfolio theory fundamentals; Risk-return tradeoff; Diversification.

Week 8: Advanced portfolio theory; Risk pooling and sharing; Portfolio optimization.

Week 9: Exchange rates; International capital markets.

Week 10: Financial derivatives; Options and pricing basics; Trading strategies; Put-call parity.

Week 11: Option pricing models; Binomial model; Risk-neutral valuation; Black-Scholes formula.

Week 12: Risk and return; CAPM; Factor models (APT); Market efficiency.