Ecn61104 Financial Economics: Limitations Assessment Answer

Task:

Upon successful completion of this subject, students will be able to:

1. Demonstrate the fundamental knowledge of financial economics.

2. Analyse and apply theoretical and dynamic models.

3. Evaluate real world issues utilising relevant models.

4. Explain and defend analysis orally, visually and in written manner

This module has exposed learner to the markets with asymmetric information. Under this topic, market signaling, moral hazard, the principal-agent problem and asymmetric information in labor market is explained. In order to have a better understanding of theory application, this assignment will focus important empirical and theoretical contributions of any of above mentioned sub-topics in relevant research papers.

The analysis should cover the following questions:

1. What are the objectives of the chosen articles?

2. What are the articles contributions relative to the prior literatures?

3. What are the main features of the model tested? What are its testable hypotheses? How plausible are the underlying assumptions?

4. What type of data is used in the study and what is the econometric method used to test the model(s)? (Be very brief here)

5. What are the main conclusions of the studies? What would be your concerns about the conclusions and their validity?