Topics in Financial Economics
| Module title | Topics in Financial Economics |
|---|---|
| Module code | BEAM029 |
| Academic year | 2019/0 |
| Credits | 15 |
| Module staff | Dr Rajesh Tharyan () |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 11 |
| Number students taking module (anticipated) | 125 |
|---|
Module description
Note for Students
This course will assume that students are familiar with basic calculus (first and second derivatives and optimization of functions) and matrix algebra (addition, multiplication, inverse of a matrix) etc.
Summary:
This module provides an introduction to the foundations of financial theory and to selected empirical evidence on the topics covered. The concepts and models of modern finance theory are widely employed in the investment industry and an understanding of these provides a solid foundation for a successful career in finance, whether as a fund manager, investment analyst or financial advisor.
Additional Information:
Internationalisation: The financial economics topics taught in this module are relevant across countries and many international examples are discussed in the lectures.
Sustainability: All of the resources for this module are available on the ELE (Exeter Learning Environment).
Employability: Students develop their understanding of the theoretical foundations of financial economics and their empirical testing that are essential background to working in the financial sector.
Module aims - intentions of the module
This module introduces students to the foundations of finance theory as well as to a selection of related empirical research. The theoretical models and empirical research covered on various topics form the basis of many applications in financial markets and are widely employed in the finance industry. An understanding the theory and empirical issues in this course provides a background for a successful career in the finance industry.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. model the problem of investor choice under uncertainty
- 2. interpret the concepts of risk and return in financial markets
- 3. understand and derive the mathematics of portfolio theory
- 4. compare and contrast the assumptions and theoretical implications of the Capital Asset Pricing Model and the Arbitrage Pricing Theory and appreciate selected empirical research related to these models
- 5. introduction to basic ideas of the bond market and bond portfolio management
- 6. appreciate the role of the Efficient Markets Hypothesis and to relate it to empirical evidence
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 7. use standard mathematical tools, including basic calculus and matrix algebra, to analyze models used in financial economics.
- 8. develop rigorous theoretical arguments based on mathematical reasoning
- 9. understand and solve quantitative problems in finance
- 10. interpret financial data in the light of established theories
- 11. access selected empirical research literature and critically appraise it
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 12. understand concepts by solving quantitative problems
- 13. use logical analysis to structure arguments for and against financial models
- 14. work independently and understand the strengths and weaknesses of theoretical models in finance
Syllabus plan
- Introduction to Course:
- Review of Mathematical Background
- Choice under Uncertainty
- Mean-Variance Portfolio Theory
- The Capital Asset Pricing Model and Arbitrage Pricing Theory
- Fixed Income Instruments
- The Efficient Markets Hypothesis and Anomalies
- Course Wrap Up and Review
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 32 | 118 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Contact hours | 22 | Lectures |
| Contact hours | 10 | Tutorials |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| Problems sets | 20 minutes | 9-13 | Oral comments |
| Mid-term test | 45 minutes | 1-6, 9-13 | Oral and written model solutions |
Summative assessment (% of credit)
| Coursework | Written exams | Practical exams |
|---|---|---|
| 20 | 80 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| One In-class multiple choice and/or numerical problem-based Class Test | 20 | 45 minutes | 1-10 | Solutions distributed on ELE, discussion in tutorials/lecture sessions |
| Individual Written Exam | 80 | 1 hour 15 minutes | 1-8, 10-13, 12-14 | Extensive solutions available on ELE after the exam |
Details of re-assessment (where required by referral or deferral)
| Original form of assessment | Form of re-assessment | ILOs re-assessed | Timescale for re-assessment |
|---|---|---|---|
| In class test and written exam | Written examination (100%) 1 hour 15 minutes | 1-14 | Aug/Sep |
Indicative learning resources - Basic reading
Basic reading:
The following text book will be used in the course. However given the nature of the topics additional readings will be indicated wherever required.
Main Textbook:
Elton, E.J., Gruber, M.J., Brown, S.J. and Goetzmann, W.N. (2011) Modern Portfolio Theory and Investment Analysis, International Student Version, 8th edition, US: John Wiley & Sons.
Other resources:
A list of references and web resources will be made available on the ELE
Lecture handouts will be based on related material from these texts and other references. Students are required to refer to original Chapters in the texts assigned in the readings for each week. Copies of the main text books are available in the library. The core material relevant to the course can be found in relevant chapters of alternate textbooks, however with at differing levels of difficulty. Some topics require reading of published papers and articles. Full details of references for each topic will be distributed at the start of the course.
Indicative learning resources - Web based and electronic resources
Exeter Learning Environment (ELE) portal of the course and the materials available there.
Indicative learning resources - Other resources
Text book Websites
| Credit value | 15 |
|---|---|
| Module ECTS | 7.5 |
| Module pre-requisites | This course will assume that students are familiar with basic calculus (first and second derivatives and optimization of functions) and matrix algebra (addition, multiplication, inverse of a matrix) etc. |
| Module co-requisites | BEAM047 - Fundamentals of Financial Management |
| NQF level (module) | 7 |
| Available as distance learning? | No |
| Origin date | 01/09/2010 |
| Last revision date | 15/08/2016 |
