The Economics of Financial Markets [Hardcover]

Hendrik S. Houthakker (Author), Peter J. Williamson (Author)

Book Description

ISBN-10: 019504407X | ISBN-13: 978-0195044072 | Publication Date: September 12, 1996

This book puts economics to work on the daily problems faced by investors, traders, speculators and brokers as they wrestle with increasingly complex financial markets. Drawing on data direct from the financial behavior of households, corporations, and governments, through to the prices of individual securities, the authors show how accessible but rigorous economics can help the players make sense of the hour-by-hour reality of the way financial markets move. Many of the twists and turns that might seem random at first sight are, they contend, rational and often predictable. But inefficiencies do exist, and the authors also demonstrate how these can become unique profit opportunities. By bringing together information on the daily workings of financial markets with the concepts and tools of economics, Houthakker and Williamson have provided a valuable resource for practitioners and students alike.

Editorial Reviews

Review

"This well-written book, while important to library collections, will probably best be used as supplemental readings for most courses in finance or financial economics....As the subject penetrates further into the liberal arts colleges, the Houthakker/Williamson approach may be more widely used. An excellent supplemental work for upper-division undergraduates and graduates."--Choice

"The Economics of Financial Markets is an outstanding book about financial markets....[IT] deserves to be a standard reference. It is an excellent choice for economists who would like to become acquainted with the economics of financial markets or for practitioners who want an overview of financial markets. Based on Houthakker's lectures in an elective, undergraduate course at Harvard for economics majors, it also would be useful in a Master's level course and in a course with birght, diligent undergraduates."--Journal of Economic Literature

About the Author

Hendrik S. Houthakker is Professor of Economics at Harvard University.
Peter J. Williamson is Dean of the MBA Program and Professor of Business Policy at the London School of Business.

Product Details

• Hardcover: 376 pages
• Publisher: Oxford University Press, USA (September 12, 1996)
• Language: English
• ISBN-10: 019504407X
• ISBN-13: 978-0195044072
• Product Dimensions: 9.1 x 5.9 x 1.2 inches
• Shipping Weight: 1.5 pounds (View shipping rates and policies)
• Average Customer Review: 4.7 out of 5 stars  See all reviews (3 customer reviews)
• Amazon Best Sellers Rank: #1,093,780 in Books (See Top 100 in Books)

Customer Reviews

Most Helpful Customer Reviews

5 of 5 people found the following review helpful:

4.0 out of 5 stars Great Introduction, August 18, 2000

By 

Joe Tsou (Vancouver, BC, Canada) - See all my reviews
(REAL NAME)   

This review is from: The Economics of Financial Markets (Hardcover)

This book presents the basic economic concepts behind daily activities on financial markets, such as stock price or exchange rate movement, and tries to explain the relations between them. It briefly introduces choice under uncertainty, risk aversion, portfolio optimization problems, market efficiency hypothesis, and equilibrium of asset markets. In addition, the Capital Asset Pricing Model (CAPM), and Arbitrage Pricing Theory (APT) are presented. It brings the most exciting part of academic evolution of financial economics in the last three decades to the pubic with modest knowledge of mathematics. It also shows the weakness of these theories. Very self-contained and readable. However, if you want to pursue a ground understanding of these theories, you should go further.

4 of 4 people found the following review helpful:

5.0 out of 5 stars Deserves 5 stars, December 6, 2001

By A Customer

This review is from: The Economics of Financial Markets (Hardcover)

The intention behind this book was to provide a solid introduction and overview of financial economics and financial institutions. The authors suceed brilliantly in those goals. Most people with limited training in economics and mathematics should be able to understand the book (so, for example, this book would be great for early undergraduates or MBA students who have not been exposed to finance or economics).

I think there is enough information in this book to be of some use to even people who have more advanced training. Why? This book gives a good overview of both the theoretical (deductive proofs) and empirical (econometric) research that has been done on various topics (relatively up to date). The book tries to give a balanced view of the merits or problematics of any particular theory in financial economics.

This book deserves a 5 star rating rather than a 4 star one because for what it was intended to be -- a solid introduction and overview -- it does a superb job. It would be unfair to judge any book by some unintended higher standard when it does a great job at doing what it intended to do. Bottom line: If you need a good introduction to financial economics, this is a good place to start.

4 of 5 people found the following review helpful:

5.0 out of 5 stars Good review of the basics..., July 12, 2004

By 

Jared Berry (St. Paul, MN, USA) - See all my reviews

This review is from: The Economics of Financial Markets (Hardcover)

As a law student with an econ degree, I was looking for a way to review concepts I had learned in a financial economics course without having to lug around Copeland and Weston. I found this book covered all the concepts I was looking for at a deep enough level and with enough math to keep me satisfied. This book was written for MBA's or advanced undergradute business majors, but to that list I would also include two more groups: (1) those with a background in econ or math that wish to review concepts learned long (or not so long) ago, and (2) anyone wishing to gain a deeper understanding of financial markets through applying a more rigorous, scientific approch.

This book teaches basic financial principles like the risk-return relationship, the CAPM, efficient market hypothesis, and option pricing. Hopefully this book will help deter some of those hoping to find a "get rich quick" method of investment that systematically "beating the market" is not possible in the long run.