The Economics of Financial Markets

by Roy E. Bailey

Overview

The Economics of Financial Markets presents a concise overview of capital markets, suitable for advanced undergraduates and for beginning graduate students in financial economics. Following a brief overview of financial markets—their microstructure and the randomness of stock market prices—this textbook explores how the economics of uncertainty can be applied to financial decision-making. Emphasis is placed on the economic principles underlying all financial markets, focusing on markets for equities, bonds, futures and options contracts.

Product Details

ISBN-13:	9780521612807
Publisher:	Cambridge University Press
Publication date:	05/26/2005
Edition description:	New Edition
Pages:	550
Product dimensions:	6.85(w) x 9.72(h) x 1.30(d)

About the Author

R. E. Bailey is Reader in Economics at the University of Essex. His main interests are in monetary economics, together with economic history and philosophy.

Table of Contents

Preface; 1. Asset markets and asset prices; 2. Asset market microstructure; 3. Predictability of prices and market efficiency; 4. Decision making under uncertainty; 5. Portfolio selection: the mean-variance model; 6. The capital asset pricing model, CAPM; 7. Arbitrage; 8. Factor models and arbitrage pricing theory, APT; 9. Empirical appraisal of the CAPM; 10. Present value relationships and price variability; 11. Intertemporal choice and equity premium puzzle; 12. Bond markets and fixed-interest securities; 13. Term structure and interest rates; 14. Futures markets - fundamentals; 15. Futures markets - speculation and hedging; 16. Futures markets - applications; 17. Swap contracts and swap markets; 18. Options markets: fundamentals; 19. Options markets - price determination; 20. Options markets - applications.

Editorial Reviews

'This is a very well-written and thorough presentation of the key topics in financial economics - the book deserves to be widely adopted in support of courses in this dynamic area of teaching and research.' Peter Smith, University of York

'Roy Bailey has written a highly readable and comprehensive introduction to financial markets. He takes the reader carefully through relevant theories before describing how they relate to different financial markets. Students will benefit from Roy Bailey's rigorous but approachable style of writing.' Colin Mayer, Peter Moores Professor of Finance, Saïd Business School, University of Oxford

'Roy Bailey takes the rigourous economists approach and provides a detailed treatment of the underlying theoretical concepts. … provides complete coverage of the important concepts involved.' The Times Higher Education Supplement

From the Publisher