Financial economics

Financial economics is the branch of economics concerned with the workings
of financial markets, such as the stock market, and the financing of
companies.

It attempts to answer questions such as:

   * How are the prices of financial assets, such as shares and bonds,
     determined?
   * What are the effects of a company choosing different methods of
     financing its operations, such as issuing shares or borrowing?
   * What portfolio of assets should an investor hold in order to best meet
     her objectives?

Key concepts used in financial economics include:

   * Arbitrage
   * Efficient markets theory
   * Risk