The course analyses the role of money in the economy and provides an introduction to financial economics. The first part of the course describes and analyses the role of the central bank and the importance of banks for the transmission mechanism. The next part of the course deals with interest bearing instruments. Different debt instruments are defined and explained as well as the basic concepts of how to value financial assets. Particular emphasis will be put on bonds. The final part of the course introduces modern portfolio theory, including Markowitz model and CAPM. The econometric part of the course focuses on time series analysis of financial data.