Economics 434

Theory of Financial Markets

Professor Edwin T. Burton

Monroe Hall: Room 262 (Tues/Thurs)

1900 Arlington Blvd; Suite C (Mon/Wed/Fri)

212 731-2340 (etb6d@virginia.edu)

Office Hours: Tues/Thurs 11-12 AM in Monroe Hall

Class will meet on Tuesdays and Thursdays from 9:30 AM until 10:45 AM in the main Wilson Auditorium. From time to time classes may be rescheduled to Sundays from 1:00 PM until 3:00 PM(or from 2:00 PM until 4:00 PM) in the main Wilson Auditorium to make up for regular classes that might have to be cancelled because of the professor's traveling schedule. This is a considerable amount of reading in this course. The required books are the following:

Reading Assignments:

Financial Market Theory, 2010 Edition, by Edwin T Burton (this book will not be ready until mid-September, Chapters that need to be read will be posted online at this site)

Random Walk Down Wall Street, by Burton Malkiel (this book should be read first and completed during the first few lectures in the class)

Fall 0f 2008, by Edwin T Burton (available at Prof Burton's office, Amazon, or UVa bookstore.

The following book is suggested (for those who really want to go far beyond this course):

Investment Science, by David Luenberger [Oxford, 1998] {this is a very mathematical treatment of modern finance and will only be readable by mathematically experienced students}

(To view Office 2007 Versions of Power Point, you may need to download the PPViewer for 2007)

Lectures:

Opening Day, Tuesday, August 24th, 2010, Intro to Econ 434
Thursday, August 26th, 2010, Intro to Fixed Income Securities
Tuesday, August 30th, 2010, More on the Time Value of Money
Thursday, September 2, 2010 US Treasury Market
Tuesday, September 7, 2010 Auctions, Stripping Securities, Duration
Tuesday, September 21, 2010 Mortgages, More on ABS
Thursday, October 7, 2010 Introduction to Modern Portfolio Theory

A Video of Harry Markowitz and Bill Sharpe saying hello to Econ 434 Students

There will be two mid term examinations and one final examination,with the final grade determined by a weighting of 30/30/40 with the final amounting to 40 percent. The final examination is cumulative. The final examination is scheduled for Friday, December 17, 2010 beginning at 2 PM and ending at 5 PM. The examination will be held in the Wilson Auditorium. No examination may be skipped without a bona-fide excused absence (illness, etcetera). There is no option available for missing exams.

Examination I – Tuesday, October 5th

Examination II –Thursday, November 11th

Final Examination – Friday, December 17, 2010 2PM – 5PM, Wilson Auditorium

Please Note: If you cannot make the examinations as scheduled, please do not take this course. We do not give make-up examinations. If you are unable to take the final on time as schedule, you will, at best, receive an incomplete for this course. There are no exceptions.

The Main Topics Covered In This Course Are:

     1. Fixed Income Markets
     2. Modern Portfolio Theory
     3 Leverage, Corporate Balance Sheets, Buyouts
     4. Alternative Assets

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