Asset Prices, Risk, and Information

1 Asset Prices, Risk, and Information

Welcome to the course notes for ECON 450: Financial Economics, at Brigham Young University. These notes cover the core topics of a first calculus-based course in financial economics, progressing from the mechanics of financial markets and the principles of portfolio theory through the Capital Asset Pricing Model and its extensions, to the analysis of fixed income securities and the pricing of derivatives including forwards, futures, and options. The goal is to give students a rigorous yet accessible foundation for understanding how financial markets work, how assets are priced, and how the tools developed here can be used to make sound financial decisions.

This edition was compiled on July 3, 2026.