"Financial economics is the branch of economics characterized by a 'concentration on monetary activities' [...] as opposed to those concerning the real economy."
The study of financial markets and institutions and their impact on the economy.
Time Value of Money: The concept that a dollar today is worth more than a dollar in the future due to the opportunity cost of not having that money today.
Risk and Return: The relationship between the risk associated with an investment and the potential return on that investment.
Capital Markets: The market where long-term securities such as stocks and bonds are bought and sold.
Financial Instruments: The various securities and derivatives such as stocks, bonds, futures, and options that are used to invest and manage risk.
Financial Intermediaries: The firms such as banks and insurance companies that act as intermediaries between investors and borrowers.
Monetary Policy: The decisions made by the central bank of a country regarding the money supply and interest rates.
Fiscal Policy: The decisions made by a government regarding taxation and spending.
Asset pricing theory: The theory that attempts to explain how the prices of financial assets are determined in a market.
Portfolio theory: The theory that attempts to explain how investors can construct an optimal portfolio of assets to minimize risk and maximize returns.
Corporate Finance: The study of how firms make investment and financing decisions.
International Finance: The study of how financial systems operate in a global context.
Behavioral Finance: The study of how psychology affects financial decision making.
Financial Econometrics: The application of statistical and econometric methods to financial data.
Financial Regulation: The governmental rules and regulations that oversee the financial industry.
Financial History: The study of the evolution of financial systems and financial crises.
Financial Markets and Institutions: The study of the various financial institutions such as banks, insurance companies, and investment banks, and the markets they operate in.
Microeconomics of Banking: The study of the economics of banking such as lending decisions and interest rate risk management.
Macroprudential Regulation: The regulation of the financial system as a whole to prevent systemic risks.
Financial Stability: The study of how the financial system can maintain stability in the face of shocks such as financial crises.
Financial Modeling: The use of mathematical models and computer algorithms to analyze financial data and make predictions.
"It has two main areas of focus: asset pricing and corporate finance."
"The first being the perspective of providers of capital, i.e., investors, and the second of users of capital."
"It thus provides the theoretical underpinning for much of finance."
"The subject is concerned with 'the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment'."
"It, therefore, centers on decision making under uncertainty in the context of the financial markets, and the resultant economic and financial models and principles."
"It is concerned with deriving testable or policy implications from acceptable assumptions."
"It thus also includes a formal study of the financial markets themselves, especially market microstructure and market regulation."
"It is built on the foundations of microeconomics and decision theory."
"Financial econometrics is the branch of financial economics that uses econometric techniques to parameterize the relationships identified."
"Mathematical finance is related in that it will derive and extend the mathematical or numerical models suggested by financial economics."
"Whereas financial economics has a primarily microeconomic focus, monetary economics is primarily macroeconomic in nature."
"Its concern is thus the interrelation of financial variables, such as share prices, interest rates and exchange rates."
"[...] in which 'money of one type or another is likely to appear on both sides of a trade'."
"[...] in an uncertain environment."
"It is concerned with 'the allocation and deployment of economic resources, both spatially and across time'."
"[...] deriving testable or policy implications from acceptable assumptions."
"It is built on the foundations of microeconomics."
"It uses econometric techniques to parameterize the relationships identified."
"Whereas financial economics has a primarily microeconomic focus, monetary economics is primarily macroeconomic in nature."