ECO 6321, Spring 2006

Financial Economics 1
Class meets Monday and Wednesday, 12:30-1:45pm

Instructor: Dr. Nathan Berg, Associate Professor

Email: nberg@utdallas.edu
Phone: 972.883.2088
Office: Green Hall 3.130
Office Hours: By appointment. Please email me to schedule an appointment. If you’d
like to ask a question by email, that’s fine. If you’re asking for an appointment, I’d like
you to suggest a time (or several possible times) in your email.
Text: Investments, Sixth Edition, by William Sharpe, Gordon Alexander and Jeffery
Bailey

Course Plan
Rates of return and sums of series (background material not in text, chapter 1)
Bonds (chapter 5)
Buying and selling securities (chapter 2)
Security markets (chapter 3)
Market efficiency (chapter 4)
Portfolio analysis (chapters 6-8)
Capital Asset Pricing Model (chapter 9)
Factor models (chapter 10)
Arbitrage pricing theory (chapter 11)
Valuation of common stocks (chapter 17)
Options (chapter 19)

I plan to follow the topics above in sequence, but not according to a fixed schedule.
Throughout, I will supplement the textbook material to introduce additional mathematical
tools of the trade used in important financial economics applications. You should aim to
read at least one chapter ahead.

Assignments and Grading

Your grade will based on a 100-point scale distributed over four items:
[10] Class participation [10]
[10] In-class presentation of your original research proposal [10]
[20] Written research proposal (Due by noon, Monday, May 1. Hand your paper in
under my office door.)
[60] In-class exam, Monday, April 24

Student presentations of original research proposals will be held April 10, 12, 17.
Exam review and student evaluations on Wednesday, April 19.

Grades
In assigning final grades, I will begin with the following thresholds:
 90-100 A
80-89 B
65-79 C
<65 F
These thresholds indicate the minimum grade you will receive. At the end of the
semester, I may adjust the grades upward by moving grade thresholds downward.
Original research proposal:
You are to write a 4-8 page research proposal. I would like you to draw on current events
and your own interests, pick a narrow topic, pose a well-defined problem, consult the
academic literature, generate hypotheses, and envision an empirical research project that
would provide new insights about the issue at hand. You will not be required to follow
through on the proposal and complete the research project. Rather, you should write a
persuasive and well-researched description of a research project that you would be
interested in carrying out and that would potentially contribute to the academic literature
in financial economics.
Your proposal must include at least five references to economics journal articles. In
addition to academic journal articles, you may include any other sources you wish. I
encourage you to read widely including newspapers such as the New York Times or Wall
Street Journal.

Your proposal should include the following:

1. An introductory paragraph that establishes the issue and its importance
2. A clear and precise statement of the research question
3. A very brief summary of the related academic literature (Don’t introduce filler! Each
citation should provide useful contextualization by reviewing key results about your issue
that are already established)
4. Data description (You may propose to run an experiment, use an existing database, or
propose to collect your own field data.)
5 Hypothesis (hypotheses) to be tested
6. Method/Data analysis
7. [optional] Anticipated results
8. References
You must format your paper using double-spacing, standard margin sizes, and 12-point
Times New Roman fonts. Organization and style almost always count in professional
writing. Please be ambitious about your writing project. Be bold in envisioning new
concepts. Be thorough in your background reading and citations. Follow the formatting
requirements exactly. Proofread your paper at least ten times. Be willing to continue
editing and re-editing. Turn it in on time.

In-class Presentation of Research Proposals

Early in the semester, I will distribute a sign-up sheet for timeslots to present your
research proposal in class. The goal is to practice being a clear and persuasive
communicator while hopefully collecting useful feedback. You will have only 5-8

2
minutes for your presentation plus 2-3 minutes to field questions from the audience.
More details will be provided in class.

Schedule Problems
If you have an emergency or a valid conflict and provide me with written documentation,
I will consider granting an extension or providing an alternative assignment. Otherwise, I
do not want to extend any deadlines or permit schedule changes. Late papers will be
penalized at least 2 points (10 percent) per day. Papers that are several days late may not
be accepted at all. I want you to succeed in this class. Please stay organized and work
well ahead of deadline.

Incompletes
There will be no grades of incomplete awarded without appropriate documentation.

Scholastic Dishonesty
Scholastic dishonesty includes, but is not limited to, cheating on assignments or
examinations, plagiarizing (misrepresenting as your own work any part of work done by
another), submitting the same assignment, or substantially similar assignments to meet
the requirements of more than one course without the approval of all instructors,
depriving another student of necessary course materials, or interfering with another
student's work. If in doubt about the ethics of your actions, consult the Catalog to see the
University's policy. Scholastic dishonesty will not be tolerated. Students are responsible
for knowing what constitutes scholastic dishonesty and its consequences (see
http://www.utdallas.edu/student/slife/chapter49.html). If you have any doubts, contact
me before you turn in your assignments.

Accessibility (for students with disabilities)

If you have a condition that requires accommodation in this course, please speak with me
after class or in office hours during the first week of class. I will be happy to make
appropriate accommodations provided timely notice is received and the arrangement is
consistent with any recommendations from Disability Services, when applicable.
Disability Services can be reached at 883-2098. The syllabus and other course materials
can be made available in alternative formats.
Attendance Policy
There is no explicit attendance requirement for this course. However, if students expect
to do well, regular attendance is necessary. Assignments may change, and adjustments to
the exam schedule may occur. Students who miss deadlines or fail to complete an
assignment because they did not hear scheduling announcements in class will not be
excused. Please do not ask me for notes.
Disclaimer:
This syllabus is tentative and can be changed. All changes will be announced in class.