Modern Financial Economics

Financial economics is a branch of economics apprehensive with the workings of financial markets, such as financing companies and stock market. Financial economics are characteristically framed as time, uncertainty, options and information.

In financial economics investors are requested to balance risk and return when investing in assets or securities. As at present investments has become a highly popular business trend it is easy to get misled with the economy behavior at present. Therefore investors are concerned about balancing their risk in investing today.

The pricing of the assets according to the market behavior is fluctuating today with the current economy situation. Businesses are more concerned on selling goods rather than being concerned about the supply against the demand of the product today. Therefore capital asset pricing model has not been practical with down fall of the economy at present.

Financial economics declare that pension assets should not be invested in equities for a variety of practical and theoretical reasons as eventually the risk is being assumed  by the beneficiary or the by employer today.

Contemporary financial economics research shows that financial decision makers act rationally and primarily concerned about the limits to rationality of economic agents today.

The Present Economic Crisis

The economic crisis is somewhat unpredictable and makes the economy of almost every country unstable. Even though we are at the middle part of this year we must admit that we are experiencing the instability now on when we are still recovering from the economic crisis which occurred in 2008.


As 2011 is described is a period of uncertainty many things are expected to go wrong and affect the economy of many countries. One of them is the fluctuations in the stock market. The loss of confidence with the investors is a major reason for the decline in the stock market. The debt crisis   affecting in Europe and USA is a main reason for this situation.


Many organizations and businesses are implementing cost reduction policies at present to be prepared for the economic crisis and as a result, many countries are leading to massive unemployment and the businesses into bankruptcy. The economic crisis that Greece is experiencing is an example of economic crisis.


Contemporary economic crisis researches advise to spend less and save more during this period and sought for financial advice before considering any investments as this is an inevitable situation that is occurring globally.