Autumn

Unit(s) of Assessment	Weighting Towards Module Mark (%)
2 hour Examination	70
2 Assignments worth 5% each	10
Class Test as part of coursework	20

This module develops finance for students interested in the “buy side” of securities (suppliers of capital such as individuals and pension plans) rather than the “sell side” of securities (demanders of capital such as corporations and governments). Material taught in this unit forms the theoretical background necessary to fully understand how financial markets and products relate to the financial goals of individuals. This unit is aimed at students seeking a career in the Financial Services Industry.

This module will also us Risk Manager Trading Simulation^TM. The objective is to build up the student's knowledge and skill sets of the kinds of activities traders need in order to work on a dealing desk in the City. This imparted in three one-hour dealing room sessions. Students can then explore the Risk Manager Trading Simulation on their own.

This module aims to provide a complete Introduction to Financial Theory through a study of the problems of investing capital, specifically valuation of securities such as shares, bonds, options and futures both as individual investments and their contribution to risk and return in a portfolio context. This course provides the necessary theoretical background to appreciate the role retail financial products play in wealth management for individuals. This course also provide a practical element by providing dealing room sessions. These allow the student to manage a portfolio as a market user and to manage a bid ask spread as a market maker through interacting with other students in a dealing room environment.

On successful completion of this module the students will be able to:

Understand and be able to explain the key financial theories, including asset valuation, efficient markets, portfolio management, capital asset pricing, and risk management. (K) 
 

Introduce various types of important financial securities and discuss the role each financial security can play in achieving financial objectives (K, C) 
 

Critically think both theoretically and strategically about financial investments and be able to apply the theories to develop a portfolio strategy for individuals. (C) 
 

Critically evaluate financial investments and be able to make appropriate investment decisions given the goals of the client. (P) 
 

Be able to communicate effectively in discussions related to investments and actively participate in a discussion forum. (T)

Be able to trade equity securites  for a client in a dynamic investment environment.

The goals of Investment
The prin ciples of Valuation
Capital Market Efficiency
Portfolio Theory and the Capital Asset Pricing Model
Equity Valuation 
Bond Valuation 

Performance measurement

The teaching and learning strategy is designed to allow students to come to grips with the essential quantitative nature of the subject, and more importantly, to facilitate the application to practical problems.  

The teaching and learning methods include formal lecture and tutorial to impart theory and dealing room simulations to impart practical trading skills. Exercises are used to reinforce and test learning and the use of U-Learning to facilitate teaching, enhance the learning outcomes and direct students to the relevant reading in the set textbooks and in journal articles.

Expected purchase 

Bodie, Zvi., Kane, Alex and Alan J. Marcus (2005), Investments (6th international edition), McGraw-Hill.  

Recommended 

Cuthbertson,Keith and  Dirk Nitzsche (2001) Investments: Spot and Derivatives Markets, John Wiley & Sons. 

Elton, Edwin J., Gruber. Martin, J., Brown, Stephen J., and William N. Goetzmann (2004) Modern Portfolio Theory and Investment Analysis, (6th edition) John Wiley & Sons 

Levy, Haim and Thierry Post (2005) Investments, Prentice Hall. 

Sharpe, William F., Alexander, Gordon J. and Jeffery V. Bailey, (1998) Investments (6th international edition), Prentice Hall. 

Supporting

Damodaran Aswath, (1994) Damodaran on Valuation: Security Analysis for

Investment and Corporate Finance John Wiley & Sons.

Kolb, Robert W. (1997) Understanding Futures Markets (5th edition) Blackwell Publishers 

Hull , John C. (2006) Options Futures and other Derivative Securities, (6th edition), Prentice Hall.

Skinner, Frank S. (2005) Pricing and Hedging Interest and Credit Risk Sensitive Instruments, Elsevier 

Other Indicative Reading 

Articles and other material from the financial pages of newspapers and academic journals, such as: 

Journal of Finance
Journal of Financial Economics
The Review of Financial Studies
Journal of Investments
Journal of Fixed Income
Journal of Portfolio Management

26.2.09