BSc Economics

The overarching aim of the course is to enable students to understand the interface between economics and finance. To this end the course aims:

• To familiarize students with the role of uncertainty and risk in economics and finance.
• To enable students to understand the economic role of (different types of) assets.
• To introduce students to the fundamental concepts of asset markets (short selling, arbitrage, equilibrium, optimality, completeness of asset markets).
• To familiarize students with the economic fundamentals of formal theories of asset pricing, their implications and limitations.

Emphasis throughout will be on the formal theory of asset markets. There is no applied material involved.

On completion of this unit successful students will be able to:

• Have clear understanding of the economic principles underlying finance.
• Demonstrate an understanding of the role of asset markets as means of risk diversification.
• Demonstrate an understanding of the foundations and limitations of asset pricing techniques.
• Solve numerically typical problems related to asset pricing and risk management.
• Perform rigorous analysis of asset markets and portfolio decisions

The overarching aim of the course is to enable students to understand the interface between economics and finance. To this end the course aims:

• To familiarize students with the role of uncertainty and risk in economics and finance.
• To enable students to understand the economic role of (different types of) assets.
• To introduce students to the fundamental concepts of asset markets (short selling, arbitrage, equilibrium, optimality, completeness of asset markets).
• To familiarize students with the economic fundamentals of formal theories of asset pricing, their implications and limitations.

Emphasis throughout will be on the formal theory of asset markets. There is no applied material involved.

On completion of this unit successful students will be able to:

1. Have clear understanding of the economic principles underlying finance.
2. Demonstrate an understanding of the role of asset markets as means of risk diversification.
3. Demonstrate an understanding of the foundations and limitations of asset pricing techniques.
4. Solve numerically typical problems related to asset pricing and risk management.
5. Perform rigorous analysis of asset markets and portfolio decisions.

Provisional

Uncertainty and Risk:

• States of nature.
• Contingencies (events).
• Information.
• Contingent goods, contingent plans.
• Preferences over contingent plans.
• Alternative notions of risk.

Alternative Institutional Contexts of Risk Sharing:

• Contingent markets.
• Security markets.
• Real/financial securities, bonds, stocks, options, derivative securities.

Individual Behaviour Under Uncertainty:

• The no arbitrage principle.

Economies with Uncertainty:

• Contingent markets equilibrium.
• Asset markets equilibrium, the no arbitrage property of asset prices.
• Asset market completeness, equivalence between asset markets and contingent markets, optimality properties of complete asset structures and policy implications.
• Asset pricing techniques: arbitrage pricing theory, the capital asset pricing model.
• The Modigliani-Miller theorem of corporate finance.
• Incomplete asset markets, causes and consequences.
• Information, (rational) expectations.

Synchronous activities (such as Lectures or Review and Q&A sessions, and tutorials), and guided self-study

• Tutorial exercises.
• Three online homework sets.
•  Office hours.
• Revision sessions.
• Discussion boards.

Theory of Incomplete Markets, M. Magill and M. Quinzii, MIT Press, Chapter 1.

For every 10 course unit credits we expect students to work for around 100 hours. This time generally includes any contact times (online or face to face, recorded and live), but also independent study, work for coursework, and group work. This amount is only a guidance and individual study time will vary

Tuition fees for home students commencing their studies in September 2027 will be £10,050 per annum. Tuition fees for international students will be £35,300 per annum.

For general information please see the undergraduate finance pages.

All students should normally be able to complete their programme of study without incurring additional study costs over and above the tuition fee for that programme. Any unavoidable additional compulsory costs totalling more than 1% of the annual home undergraduate fee per annum, regardless of whether the programme in question is undergraduate or postgraduate taught, will be made clear to you at the point of application. Further information can be found in the University's Policy on additional costs incurred by students on undergraduate and postgraduate taught programmes (PDF document, 91KB).

We know that student finance can be complicated. The links below provide further information to help guide you.

Learn more about student finance options for UK students.

Learn more about fees and finance for international students.

As an international student you may be eligible for our Global Futures Scholarships . This is open to students starting their studies in September 2026.