Financial economics encompasses a broad area of topics and issues, including corporate investments and financing policy, security valuation, portfolio management, the behavior of prices in speculative markets, financial institutions, and intermediation.
The Yale program in financial economics is designed to give the student a strong background for study and research in both theoretical and empirical work in finance and related areas. Emphasis is placed on understanding the important concepts and models. In addition to having strong quantitative skills, students must understand the economic theory on which most of the financial economics is based. Students normally take several graduate courses in the Department of Economics, particularly in microeconomics and macroeconomic theory, the economics of uncertainty and econometrics.
The program offers two courses specifically in financial theory and its applications. In addition, the faculty and doctoral students attend a seminar that features speakers from around the country. However, primary emphasis is placed on individual study and research under the guidance of the faculty. The small number of students in the program allows for abundant individual direction.
Examples of potential areas of research for the financial economics dissertation include:
* Stochastic behavior of security prices
* Contingent claims analysis and option pricing
* Equilibrium models with rational expectations
* Game theoretic models of competitive markets
* Economics of information
* Principal-agent relationships
* Financial intermediation
* Efficiency of markets
* Portfolio selection