| Module Code: ECO3026 |
Module Title: CORPORATE FINANCE & DERIVATIVES MARKETS |
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Module Provider: Economics
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Short Name: ECO3026
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Level: HE3
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Module Co-ordinator: NEWMAN ME Mrs (Economics)
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Number of credits: 30
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Number of ECTS credits: 15
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| Module Availability |
All Year
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| Assessment Pattern |
| Unit(s) of Assessment |
Weighting Towards Module Mark(%)
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3 Hour Examination
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70
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| Coursework |
30
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Qualifying Condition(s)
A weighted aggregated mark of 40% is required to pass the module. |
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| Module Overview |
| The aim of this module is to introduce in some details the workings of derivative financial markets and to analyse applications of the theory of finance to corporate policy. The first part of the module focuses on financial derivatives. These securities have been traded in organised exchanges, as well as over the counter, for decades.
The markets for derivative products are innovative and new sophisticated instruments are frequently introduced to facilitate risk-hedging or speculative investor operations. Our emphasis is on the pricing of these financial instruments, as well as their applications in the real world. The second part of the module focuses on corporate finance. Broadly defined, this area comprises all operations directed towards the procurement of funds and their investment in the various types of assets. We will therefore address questions such as 'Does the form of financing, debt or equity, matter?'; 'Does the form of financial payment, dividends or capital gains, have an effect on the value of the firm?'; ‘How can the firm select the best from a number of competing investment projects?’; 'Is the value of firm dependent on whether or not it hedges financial risks?' |
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| Prerequisites/Co-requisites |
Financial Economics.
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| Module Aims |
| The aim of the module is to facilitate a deep understanding of corporate finance, financial markets and derivative products. |
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| Learning Outcomes |
On successful completion of the module students should be able to:-
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Discern the characteristics and operations of forward and futures markets
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Interpret the mechanics of interest rate swaps
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Differentiate across the several types of options
- Price stock options
- Explain and perform investment appraisal;
- Understand the principles of corporate valuation
- Exhibition a clear knowledge of the workings of money and capital markets.
Transferable Skills:
- Problem solving
- Financial market awareness
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| Module Content |
The following is an indication of the likely topics to be covered:-
- Forwards, Futures and Swaps
- Financial Options: Markets, Properties and Strategies
- Options Pricing and Binomial Trees and Balck-Scholes
- Delta Hedging and the Greek Letters
- Investment and Rates of Return
- Capital Structure and Corporate Valuation
- The Dividend-Retention Decision
- Mergers and Takeovers
- Money & Capital Markets
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| Methods of Teaching/Learning |
Lectures (40 hrs)
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| Selected Texts/Journals |
Brealey R. & S. Myers & F. Allen, Principles of Corporate Finance, 9th ed, McGraw-Hill, 2007
Brealey R. & S. Myers & A. Marcus, Fundamentals of Corporate Finance, 6th ed., McGraw-Hill, 2008.
Fabozzi F. J. & F Modigliani, Capital Markets: Institutions and Investment, 4th ed. Prentice Hall, 2009
Hull , J. C., Options, Futures and Other Derivatives, Prentice Hall, 7th Edition, Prentice Hall, 2008.
Hull , J. C., Fundamentals of Futures and Options Markets, Prentice Hall, 6th Edition, 2008.
Hoek J. van der & Elliott R. J. Binomial Models in Finance, Springer, 2006.
Neftci S. N., An Introduction to the Mathematics of Financial Derivatives, Academic Press, 2nd Edition, 2000.
Smithson, C. Managing Financial Risk: A Guide to Derivative Products,
Financial Engineering and Value Maximisation, McGraw-Hill, 1998
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| Last Updated |
04 October 2010
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