Financial economics has several sub-topics and issues related to stocks, bonds, money market instruments, derivatives etc.Financial economics is primarily concerned with building models to derive testable or policy implications from acceptable assumptions. Some fundamental ideas in financial economics are Portfolio theory studies, regarding how investors should balance risk and return when investing in many assets or securities.

The Capital Asset Pricing Model describes how markets should set the prices of assets in relation to how risky they are. The Modigliani-Miller Theorem describes conditions under which corporate financing decisions are irrelevant for value, and acts as a benchmark for evaluating the effects of factors outside the model that do affect value.