I. Value by Arbitrage.
1. Financial instruments: an introduction.
II. Exchanging Risk.
3. Investors and their information.
4. Portfolio choice.
5. Optimal risk sharing and insurance.
6. Equilibrium on the stock exchange and risk sharing.
7. Trade and information.
8. Intertemporal valuation.
III. The Firm.
9. Corporate finance and risk.
10. Financing investments and limited liability.
"Given the explosive growth of the finance literature, even well-trained microeconomists may feel left behind. They should be grateful to Demange and Laroque for giving them such a clear and unified picture of how financial instruments allocate risk in the economy." Bernard Salanie, Columbia University
- Explores the growing range of economic decisions that are conducted under uncertainty—both on the personal level as well as by large firms.
- Analyzes the allocation of risk in the context of the current literature, as well as emphasizes the role of information in decisions and prices.
- Includes end-of-chapter exercises that supply the necessary tools for a comprehensive understanding of the field.