The core courses cover the principle areas of finance at a graduate level. The courses are typically taught in a one-day-per-week format, either Mondays or Tuesdays, during a half-semester (which lasts for 8 or 9 weeks). The Swedish House of Finance is currently offering the following core courses.
Theoretical Asset Pricing
This course initiates students to the economic principles behind models of rational valuation and investment choice. To be able to explain how assets are priced, we need to understand how economic agents optimally share out their wealth between consumption, savings and investment. As choosing a portfolio of assets is equivalent to choosing various types of financial and/or macroeconomic risks to face with, we learn how the attitude towards risk of economic agents determines investment decisions and impose restrictions on asset prices that lead to the characterization of risk premiums. The main focus is on the relationship between arbitrage and equilibrium, and how both conditions imply the existence of “state prices”, positive discount factors such that the price of any security is simply its discounted expected payoff. All asset prices are then shown to be bundles/portfolios of state prices; debt; stocks, bonds, derivatives, etc. We start with examining static economies then extend into a multi-period framework. Both parts are restricted to discrete time and symmetric and complete information. In the final part of the course (if time permits) the assumption of symmetric information is relaxed.
Theoretical Corporate Finance
The course offers a graduate level introduction to corporate finance theory. Rather than providing an exhaustive overview of the field, the course focuses in depth on selected topics, in particular firms’ financing choices (e.g., capital structure) and the allocation of corporate control. In addition, the course reviews the recent literature on institutional aspects of corporate finance. The material consists of modern game- and contract-theoretic tools applied to corporate finance. The course also aims at training students to use these tools for their own research. To this end, the course allocates time to the discussion of problem sets that the students are asked to solve in advance.
Empirical Corporate Finance
The main objective of this course is to introduce students to current research in corporate finance with the aim of identifying suitable dissertation topics. For the purpose of the course, corporate finance is very broadly defined; in particular, it includes issues at the intersection with international finance, development economics, and labor economics. While introducing different potential topics of research, the course also covers empirical methodologies of common use in corporate finance and applied microeconomics. The course will primarily focus on empirical contributions, but relevant theoretical foundations will also be discussed.
Empirical Asset Pricing
This is a course in empirical work on the asset pricing side of financial economics. It involves a combination of financial and econometric theory, as well as concrete data applications. The course starts with a review of econometric methods often used in empirical asset pricing research, and an introduction to stochastic processes used in macroeconomic and financial modeling. The focus will be on the generalized methods of moments, and on affine and regime-switching processes. These tools are introduced as a way to answering economic questions; the course is not focussing on econometric methodology per se. After reviewing the most popular asset pricing models, these techniques are applied to evaluate the ability of the models in matching stylized facts about stocks, bonds, volatility, asymmetry, currencies and defaultable claims.
Topics in Corporate Finance / Topics in Asset Pricing
These two courses are offered biennially (each course every other year). The content and the lecturers may vary from one course to another. In spring 2018, the Topics in Corporate Finance course covered the following topics: the economics of credit ratings; private firms; financial intermediation; entrepreneurship; Europe; M&A. In spring 2017, the Topics in Asset Pricing course covered the following topics: limits to arbitrage and bubbles; decentralized markets; household finance; Bayesian methods in asset pricing; predictability; higher order moments of equity returns; time-inconsistent preferences.