Finanzwirtschaft 3 – Kapitalmarkttheorie
This course will present and discuss some observations about the relationship between the returns of risky and riskless investments on the capital market. Starting from the observation of the so called "equity risk premium puzzle", namely that the difference between the expected return on risky investments and the riskless return is way too large, we will try to develop a model that explains the observed facts. In order to do this, we will consider investor preferences, market structure security design and potential irrational behavior.