This course uses basic tools of economic theory to analyze modern financial institutions and markets. The financial instruments to be covered range from credit card loans to mortgages, stocks, bonds, futures, and options. The main questions of the course are: What roles do commercial banks, pension funds, insurance companies, investment banks, mutual funds, and the government play in financial markets? What determines the prices of stocks and bonds? How can individuals and institutions deal with risk and how is risk measured? What drives innovation in financial markets? The course concentrates on contemporary U.S. institutions, but offers some historical and international perspective. Offered spring semesters. Note: ECO 262 does not count toward the major in economics for students entering in the fall of 2007 or after.
