Content and teaching | Assessment | Availability

Module content and teaching

Principal aims

The modules aims to: introduce you to the workings of the financial markets; equip you with the knowledge to use quantitative tools for pricing stocks, bonds and derivatives, and for measuring risk and return; develop a sound understanding of the main theories and models for valuing financial market instruments; make you aware of key empirical tests of asset valuation models, and their implications; provide you with structured opportunities to practise using the key tools and techniques of Financial Markets theory; prepare you for advanced undergraduate and postgraduate studies in Finance.

Principal learning outcomes

By the end of the module you should be able to: describe how equity, bond and derivatives markets function, and their importance to both individual investors and corporate decision-makers; explain how these markets determine the prices of stocks, bonds and derivatives; define the different forms of market efficiency, and discuss the findings of empirical tests of the Efficient Markets Hypothesis; assess both theoretical and empirical relationships between risk and return; formulate different hypotheses for the term structure of interest rates; solve structured numerical problems; write informed critiques of key issues in asset valuation; analyse case studies and construct arguments to support a particular solution; construct spreadsheets to (a) determine the risk-return characteristics of portfolios of risky assets; and (b) price stocks, bonds and options; calculate the forward price of a traded asset using the no-arbitrage principle; price option contracts using the one-period binomial model; calculate spot and forward rates of interest, and use these to price bonds; explain key theoretical models and the assumptions that underpin them; interpret empirical evidence; solve numerical problems and analyse case-study information; communicate complex ideas effectively, both verbally and in writing; discuss topical issues about the theory and practice of financial markets; construct spreadsheets to value financial instruments and test the robustness of those values to changes in key inputs; explain and interpret financial market information and data from the financial press; use web-based resources to find and retrieve financial market data, and spreadsheets to process that data.

Timetabled teaching activities

2 x 1 hour lecture per week, 1 x 1 hour seminar per week

Departmental link

Module assessment

Assessment group Assessment name Percentage
12 CATS (Module code: IB235-12)
D (Assessed/examined work) Assessed Course Work 20%
Examination - Main Summer Exam Period (weeks 4-9) 80%
Assessed Course Work 20%
Examination - Main Summer Exam Period (weeks 4-9) 80%

Module availability

This module is available on the following courses:

Optional Core