ECON 232
Financial Markets, Institutions and Policies Spring 2025
Division II Quantitative/Formal Reasoning

The focus of the course will be on how firms, financial markets, and central banks interact in the economy. Key questions addressed in the course include: How do firms allocate their resources to enhance their value? How are firms evaluated by the financial markets? How are asset prices determined, and how are these prices related to interest rates? Are financial markets efficient, and what are the implications of their efficiency or lack thereof? How does the financial system help with the management of risks faced by society? We will also study the role of the central bank (the Federal Reserve in the US), monetary policy, and government regulation and their impacts on financial decision making. Key questions include: How do central banks set monetary policy and how do those policies affect the economy and the financial decision-making process? How does monetary policy change when interest rates are (virtually) zero?