Overview

This course is divided into two parts where each part will demonstrate the importance of incompleteness in financial markets.

The first part deals with investors investment decisions when: they have different wealth levels and preferences, when not all future payoff structures are attainable, or when part of the investors’ wealth is non-tradeable. We will also show what these deviations from the “ordinary” theory will have on prices. Computer simulations are used extensively in order to strengthen the intuition behind concepts and to analyse different situations.

In the second part of the course we will focus on valuing projects (real options) where part of the value stems from development of the project. We will value real options when there is an option for expanding, contracting, abandoning etc. and learn how these real option models take into account the change in the input parameters/variables such as volatility, investment cost, expansion factor, contraction factor, etc.

Course Coordinators: Adam Farago and Taylan Mavruk (please contact through Canvas)

Student Course Representatives: Viktor Holmlund. You can contact the student representatives by using the messaging function in Canvas. For alternative means of contact and further information, see the course evaluation and development page.

Course Administrator: Måns Ramberg

Course Details

EFI257 is lectured in English. It is a full-time course of 7.5 credits which is offered in the first cycle (bachelor's level) and is included in the fifth semester of the Bachelor’s Programme in Business and Economics for students majoring in financial economics. It is also offered as a freestanding course, and is open to exhange students.

Course dates: 1 November - 3 December

Course registration in Ladok opens on 25 October. Registration is required for programme students and students on freestanding course. Please register for the course as soon as possible.

Syllabus EFI257

Reading List EFI257

Schedule EFI257 

Study Guide EFI257

Assessment

The intended learning outcomes of the course are assessed through an exam, two case reports, and a research proposal. 

Exam dates 

Please note: Exam registration (sign up) in Ladok is required for all exams. The registration deadline is 10 days prior to each exam date. You can find information regarding start time and location of the exam under the tab Examinations (Examinationstillfällen) on Ladok.  

The Student Portal has comprehensive information about e-exams in the university's examination halls. Please note that you, as a student, are responsible for complying with the rules for written examinations at the University of Gothenburg. It is therefore important that you read through this information well before your exam.

Some aspects of undertaking an e-examination are different from those of writing a paper-based exam. For example, a brought computer must meet specific system requirements, be able to connect to the eduroam network and have the Safe Exam Browser client installed. All necessary information can be found on the Student Portal. If you want to borrow a computer, it must be reserved in the TimeEdit system no later than five working days prior to the exam.