Whilst many undergraduate finance textbooks are largely descriptive in nature the economic
analysis in most graduate texts is too advanced for final year undergraduates. This book
bridges the gap between these two extremes, offering a textbook that studies economic activity
in financial markets, focusing on how consumers determine future consumption and on
the role of financial securities. Areas covered in the book include:
• An examination of the role of finance in the economy using basic economic principles,
eventually progressing to introductory graduate analysis.
• A microeconomic study of capital asset pricing when there is risk, inflation, taxes and
• An emphasis on economic intuition using geometry to explain formal analysis.
• An extended treatment of corporate finance and the evaluation of public policy.
Written by an experienced teacher of financial economics and microeconomics at both
graduate and postgraduate level, this book is essential reading for students seeking to study
the links between economics and finance and those with a special interest in capital asset
pricing, corporate finance, derivative securities, insurance, policy evaluation and discou