Course Catalogue

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The aim of this course is to provide students with a thorough understanding of the nature of financial markets and of the securities that are traded on them. The course stresses the necessity of deciding on the Investment Goals before taking any other decisions.

Lectures: One 2-hour lecture a week for 10 weeks.

Tutorials: Five of 1-hour each.

Tutorials are held at various times and can be selected on MyCampus

Normally a grade D3 or above in Finance 2 or equivalent.

Capital Markets Theory (superseded)

Reassessments are normally available for all courses, except those which contribute to the Honours classification. For non Honours courses, students are offered reassessment in all or any of the components of assessment if the satisfactory (threshold) grade for the overall course is not achieved at the first attempt. This is normally grade D3 for undergraduate students and grade C3 for postgraduate students. Exceptionally it may not be possible to offer reassessment of some coursework items, in which case the mark achieved at the first attempt will be counted towards the final course grade.

The aim of this course is to provide students with a thorough understanding of portfolio or fund management, as well as of the nature of financial markets and of the securities that are traded on them. The course emphasises the practical and theoretical aspects of the investment process. Concepts of risk, return, and pricing are central to developing this understanding. Various asset-pricing models and security analysis techniques will be applied to practical investment problems. International issues of diversification and fund management will be used to develop the aims of the course. The behavioural evidence regarding how investors and fund managers actually make decisions and the empirical consequences of these decisions are also explored.

At the end of this course, students should be able to:

1. Explain the mechanisms of capital markets from the perspective of an individual investor and a financial institution. 

2. Apply techniques of measuring risk and returns to evaluate different portfolios. Identify and discuss the different elements of portfolio management i.e. the concepts of risk and risk premium, international diversification and security analysis techniques.

3. Apply pricing techniques to the various assets traded within the financial markets specifically equities and bonds. Appraise securities using fundamental analysis and technical analysis.

4. Apply critical thinking in making investment decisions by relating those decisions to finance theory.

5. Explain the term structure of interest rates, forecast forward interest rates, and evaluate bond management strategies.

6. Identify and discuss the behaviour of individual investors and systematic trading biases, as well as the implications on the capital market efficiency.

7. Work collaboratively in a group to produce a combined piece of coursework.

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