Economic foundations for finance from Main Street to Wall Street /
This book provides readers with essential concepts from financial economics for an integrated study of the financial system and the real economy. It discusses how long-term market prices are determined and affected by population growth, technological progress, non-renewable resources and monetary po...
| Main Author: | Hens, Thorsten, |
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| Other Authors: | Elmiger, Sabine,, SpringerLink (Online service) |
| Format: | eBook |
| Language: | English |
| Published: |
Cham :
Springer,
[2019]
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| Physical Description: |
1 online resource : illustrations (some color). |
| Series: |
Springer texts in business and economics.
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| Subjects: |
| Summary: |
This book provides readers with essential concepts from financial economics for an integrated study of the financial system and the real economy. It discusses how long-term market prices are determined and affected by population growth, technological progress, non-renewable resources and monetary policy. The meaning of market prices is examined from the perspective of households and from the perspective of firms. The book therefore connects different fields of finance, which usually focus only on either the households? side or the firms? side. |
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| Item Description: |
Includes bibliographical references and index. This book provides readers with essential concepts from financial economics for an integrated study of the financial system and the real economy. It discusses how long-term market prices are determined and affected by population growth, technological progress, non-renewable resources and monetary policy. The meaning of market prices is examined from the perspective of households and from the perspective of firms. The book therefore connects different fields of finance, which usually focus only on either the households? side or the firms? side. Intro; Preface; About This Book; Contents; 1 Introduction; 2 Financial Markets and Institutions; 3 The Basic Economic Model; 3.1 Definition of the Market Equilibrium; 3.2 Basic Features of the Market Equilibrium; 3.3 Production and Utility Function Properties and Implications; 3.4 Technological Progress and Population Growth; 3.5 Summary; 3.6 Exercises; 4 Extension of the Model to Capital; 4.1 Market Equilibrium; 4.2 Central Planner's Problem; 4.3 Illustration of the Market Equilibrium; 4.4 Cobb-Douglas Production Function and Logarithmic Utility; 4.4.1 Effect of Population Growth. 4.4.2 Effect of Technological Progress4.5 Summary; 4.6 Exercises; 5 Extension of the Model to an Infinite Horizon; 5.1 Intertemporal Market Equilibrium; 5.2 Financial Capital and Payout Irrelevance; 5.3 Illustration of the Market Equilibrium; 5.4 Effect of Population Growth; 5.5 Effect of Technological Progress; 5.6 Income Inequality; 5.7 Introduction of Stocks; 5.8 A Special Case: The Gordon Growth Model; 5.9 Return on Equity and Debt; 5.10 Summary; 5.11 Exercises; 6 Extension of the Model to Uncertainty; 6.1 Uncertainty Structure; 6.2 Concave Utility and Risk Aversion. 6.3 Intertemporal Planner's Problem6.4 Market Equilibrium; 6.4.1 Household's Decision Problem; 6.4.2 Firm's Decision Problem; 6.5 Stochastic Discount Factor and Asset Prices; 6.5.1 Capital Structure and Payout Irrelevance; 6.5.2 Equity Premium from the Household's Perspective; 6.5.3 Equity Premium from the Firm's Perspective; 6.5.4 Stochastic Discount Factor from Market Returns; 6.5.5 Capital Asset Pricing Model; 6.5.6 Technological Progress and Population Growth; 6.6 Summary; 6.7 Exercises; 7 Extension of the Model to Exhaustible Resources; 7.1 Hotelling's Rule; 7.2 Central Planner's Problem. 7.3 Market Equilibrium7.4 Cobb-Douglas Production Function and Logarithmic Utility; 7.4.1 Sustainable Technological Progress; 7.4.2 Technological Progress as a Growth Driver; 7.4.3 Pricing Implications; 7.5 Summary; 7.6 Exercises; 8 Aggregation; 8.1 Complete Markets; 8.2 Arbitrage and the Fundamental Theorem of Asset Pricing; 8.3 Market Equilibrium with Multiple Agents; 8.4 First Welfare Theorem; 8.5 Aggregation of Households; 8.6 Aggregation of Firms; 8.7 Individual or Aggregate Rationality?; 9 Conclusion; A Mathematical Tools; A.1 Notation; A.2 Sequences and Series; A.3 Functions. A.4 Concave and Convex FunctionsA. 5 Differences and Rates of Change; A.6 First and Second Derivative; A.7 The Product Rule and Chain Rule; A.8 Partial Derivatives; A.9 Homogeneous Functions; A.10 Constrained Optimization; A.11 Envelope Theorem; A.12 Expectation, Variance and Covariance; A.13 Convex Sets; A.14 Jensen's Inequality; A.15 The Intercept Theorem; A.16 Vectors and Matrices; A.17 System of Linear Equations; B Sufficiency of the First Order Conditions; C Covariance of the SDF and Returns; References; Index. |
| Physical Description: |
1 online resource : illustrations (some color). |
| Bibliography: |
Includes bibliographical references and index. |
| ISBN: |
9783030054274 3030054276 303005425X 9783030054250 9783030054267 3030054268 |
| ISSN: |
2192-4333. |