Introductory description

This module is designed to provide students with the background of financial aspects of managerial decisions. We will cover several areas of finance, including the valuation of real and financial assets, risk management and financial derivatives, the trade-off between risk and expected return.

Module web page

Module aims

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

Introduction: Markets, "Players", Asset Classes
Portfolio Management: Portfolio Construction (Mean-Variance Optimization )
Asset Pricing Models: CAPM
Asset Pricing Models: Arbitrage Pricing Theory
Market Efficiency
Bonds: Interest Rate / Credit Risk, Strategies (based on issues relating to sustainability of firm governance, greed bonds issuance)
Derivatives: futures and options markets
Derivatives: basic valuation and hedging strategies
Portfolio Performance Measurement

Learning outcomes

By the end of the module, students should be able to:

• Demonstrate a deep understanding of the theory and practice of asset pricing, optimally combining securities into portfolios, institutional understanding of security markets, and some of the issues that a fund manager faces in putting theory into practice.
• Demonstrate a deep understanding of the theoretical and applied literature on modern portfolio management and investment analysis
• Demonstrate understanding of the vital importance of portfolio construction and diversification of risk
• Demonstrate an understanding of how better investment decisions can be made
• Use a variety of sources to acquire data to investigate a given research hypothesis.
• evaluate the relevance and practical application of established paradigms and theories
• critically appraise the concept of market efficiency and its implication for investment professionals
• Analyse real world events, case studies and/or data, in the context of a given theoretical framework.

Indicative reading list

Generic Reading lists can be found in Talis

International

Financial management involves international corporations, business, and international markets.

Subject specific skills

Evaluate issues pertaining to financial management
Perform calculation of net present value of different examples of cash flows, propose tradable risk management and arbitrage strategies
Perform basic data manipulations and analyses relevant to financial management, use spreadsheet or other suitable software to perform complex calculations and to visualise and analyse data

Transferable skills

Demonstrate problem solving skills
Demonstrate written communication skills