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2010/1 Module Catalogue
 Module Code: ECO2039 Module Title: FINANCIAL ECONOMICS
Module Provider: Economics Short Name: ECO2039
Level: HE2 Module Co-ordinator: NEWMAN ME Mrs (Economics)
Number of credits: 30 Number of ECTS credits: 15
Module Availability
All Year
Assessment Pattern
Unit(s) of Assessment

Weighting Towards Module Mark (%)

3 Hour Examination




Qualifying Condition(s)
A weighted aggregated mark of 40% is required to pass the module.
Module Overview
This module covers fundamental concepts in finance. Following an introductory analysis of the role of financial markets and the time value of money, it goes on to explore the characteristics and valuation of financial assets traded in the money and capital markets, such as treasury bills, bonds and stocks (the discussion of stock valuation also encompasses issues in capital budgeting). Market efficiency, the pricing of risk in equilibrium and the construction and management of asset portfolios are discussed next. Finally, the module encompasses basic aspects of the foreign exchange market and the derivatives market before focusing on the role of risk management in the operation of modern financial intermediaries.
Module Aims
The aim of the module is to introduce a broad set of basic concepts and tools in modern finance.
Learning Outcomes

On successful completion of this module students should be able to:-

  • Display a deep understanding of the basic workings of financial markets, including the money, capital, foreign exchange and financial derivatives markets; 
  • Apply valuation methods to a range of securities including stocks, bonds and financial options and futures contracts;
  • Appreciate equilibrium pricing models such as the capital asset pricing model (CAPM);
  • Exhibit a clear knowledge of the theory underlying the allocation of funds across assets and portfolio synthesis in equilibrium;
  • Substantiate the importance of risk management and apply value at risk (VaR) models and hedging tools.

Transferable Skills:

  • Problem solving
  • Insights into financial modelling
  • Basic training in the operations of financial decision-making
Module Content
The following is an indication of the likely topics to be covered:-
  • The role of financial markets
  • Time value of money
  • Money market securities
  • Bonds and stocks
  • The capital budgeting decision
  • Foreign exchange markets
  • Financial options and futures contracts
  • Two fund separation
  • Portfolio management
  • Capital asset pricing
  • Market efficiency
  • Foreign exchange markets
  • Risk management
Methods of Teaching/Learning
Lectures (40 hrs)
Selected Texts/Journals

Blake, D. (2000), Financial Market Analysis, 2nd edition, Wiley. 
Brigham E.F., and Houston J.F. (2004), Fundamentals of Financial Management, 10th edition, Thomson.
Elton E. J. and Gruber M. J. (2003), Modern Portfolio Theory and Investment Analysis, 6th edition, Wiley. 
Damodaran, A. (2006) Applied Corporate Finance, 2nd edition, Wiley. 
Lumby, S., and Jones, C. (2003), Corporate Finance, Theory and Practice, 7th edition, International Thomson Business. 
Saunders, A., and Cornett, M. M., (2006), Financial Institutions Management, 5th edition, McGraw Hill.


Last Updated
28 September 2010