This course examines the economic principles that determine the allocation of resources through time in market economies. It uses supply and demand relationships to value capital assets (or projects more generally). There is a detailed treatment of the effects of risk and taxes on capital asset prices, and the Modigliani-Miller financial policy irrelevance theorems are derived and examined in detail. The impact of modern contracting theory on our understanding of financial economics will also be discussed.
Learning Outcomes
Upon successful completion, students will have the knowledge and skills to:
- be exposed to the classical finance model that underpins modern finance;
- understand how securities are priced and affected by the institutional arrangements in securities markets,
- including taxes and other government regulations, and the role played by time, uncertainty, information and inflation;
- know the role played by arbitrage in finance markets and its impact on security prices;
- understand how security prices are determined in the Capital Asset Pricing Model, and the role played by the assumptions in the model;
- know the assumptions behind the the Modigliani and Miller (M-M) financial policy irrelevance theorems as basis for understanding the factors that determine the debt-equity and dividend policy choices of firms
- Be introduced to the role of contracting issues in corporate financial choices.
Other Information
Indicative Assessment
- Assessment will consist of a Final Exam, mid-semester exam(s) and in-class quizzes, or some combination thereof. See the course outline for details. (null) [LO null]
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Workload
Two lectures per week with tutorials
Inherent Requirements
Not applicable
Requisite and Incompatibility
Prescribed Texts
Preliminary Reading
Hirschleifer, J., Price Theory and Applications (2nd Edition), 1980 - Chapter 16.
A combination of material is drawn from books, journals and lecture handouts.
Fees
Tuition fees are for the academic year indicated at the top of the page.
Commonwealth Support (CSP) Students
If you have been offered a Commonwealth supported place, your fees are set by the Australian Government for each course. At ANU 1 EFTSL is 48 units (normally 8 x 6-unit courses). More information about your student contribution amount for each course at Fees.
- Student Contribution Band:
- 34
- Unit value:
- 6 units
If you are a domestic graduate coursework student with a Domestic Tuition Fee (DTF) place or international student you will be required to pay course tuition fees (see below). Course tuition fees are indexed annually. Further information for domestic and international students about tuition and other fees can be found at Fees.
Where there is a unit range displayed for this course, not all unit options below may be available.
| Units | EFTSL |
|---|---|
| 6.00 | 0.12500 |
Course fees
- Domestic fee paying students
| Year | Fee |
|---|---|
| 2021 | $2940 |
- International fee paying students
| Year | Fee |
|---|---|
| 2021 | $4890 |
Offerings, Dates and Class Summary Links
ANU utilises MyTimetable to enable students to view the timetable for their enrolled courses, browse, then self-allocate to small teaching activities / tutorials so they can better plan their time. Find out more on the Timetable webpage.
Class summaries, if available, can be accessed by clicking on the View link for the relevant class number.
Second Semester
| Class number | Class start date | Last day to enrol | Census date | Class end date | Mode Of Delivery | Class Summary |
|---|---|---|---|---|---|---|
| 6706 | 26 Jul 2021 | 02 Aug 2021 | 14 Sep 2021 | 29 Oct 2021 | In Person | View |