Course syllabus

Overview

EFI257 Incomplete Financial Markets (7.5 credits) 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)

Semester Representatives: to be decided

Course Administrators: Heléne Larsson, Catherine Granath and Lisa Sutton (ep@handels.gu.se)

Course details

EFI257 Incomplete Financial Markets is included in the fifth semester of the Bachelor’s Programme in Business and Economics for students majoring in financial economics. It is also open to visting exchange students.

Course dates: 4 November - 7 December (quarter 3). Course registration in Ladok opens on 28 October.

Syllabus and reading list EFI257

Schedule EFI257 (preliminary until 14 days prior to course start)

Study guide EFI257 (available upon registration)

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 exams in the university's examination halls. Please read through this information well before your exam.