Financial Instruments
| Module title | Financial Instruments |
|---|---|
| Module code | BEAM031 |
| Academic year | 2023/4 |
| Credits | 15 |
| Module staff | Professor Xiao Ye (Lecturer) |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 10 |
| Number students taking module (anticipated) | 420 |
|---|
Module description
Financial Instruments provides an in-depth coverage of different types of financial instruments and their valuation. These instruments include equities, bonds, derivatives and alternative financial investments such as mutual funds, hedge funds, exchange traded funds and hard commodities.
The content of this module is relevant across countries as it focuses on general theories, models and concepts that are applicable universally. Some aspects of the course looks at development in developed and emerging markets.
In this module, students develop problem-solving, numerical, analytical, and discursive skills, as well as acquiring knowledge and understanding of financial markets and related concepts.
Module aims - intentions of the module
This module aims to provide students with a comprehensive overview from the perspective of a fund manager of valuation techniques for equity, bond and derivative instruments. Apart from these financial instruments, the module aims to provide a good understanding of various professionally managed funds and their investment. The module also aims to provide, where appropriate, students with an appreciation and application of empirical research literature on issues relating to various financial instruments, portfolio strategies and in the fund management area. The module takes existing instruments and organised markets as its starting point and aims to develop both a scholarly knowledge of contracts and a critical ability to judge the appropriate use of each instrument type within a portfolio context. An important aim is to understand the intuition and the logic behind many of the models.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. demonstrate knowledge of the key characteristics of the main categories of financial instruments
- 2. demonstrate an understanding of the investment objectives and constraints of the clients of fund managers and how investment instruments and approaches can be chosen and tailored to client needs
- 3. use various approaches to the valuation of traded equity, bond and derivative instruments
- 4. critically appraise the operation of various financial markets and the specifications of the instruments traded
- 5. demonstrate knowledge of a wide variety of other investment vehicles and to evaluate critically their usefulness to both suppliers and demanders of financial instruments
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 6. collect and interpret financial data in the light of established theories
- 7. access a wide body of empirical research literature, critically appraise the literature and demonstrate its application
- 8. collect and interpret financial data and problems in the light of established theories
- 9. access a wide body of empirical research literature and critically appraise it
- 10. use relevant databases, existing research literature and techniques to create a portfolio
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 11. plan and manage his/her own study
- 12. make appropriate use of learning resources, including datasets
- 13. analyse critically problems arising in both academic and practical contexts
Syllabus plan
Whilst the module’s precise content may vary from year to year, it is envisaged that the syllabus will cover some or all of the following topics:
- Overview of common financial instruments and their financial markets.
- Equity instruments and markets; approaches to common stock valuation: discounted cash flow applications, and relative valuation techniques.
- Fixed income instruments: overview of various types of fixed income securities, valuation of fixed income securities, bonds with embedded options, understanding bond ratings, the risks associated with investing in bonds, understanding yield spreads, interpreting the yield curve, spot rates and forward rates, interest rate risk and bond portfolio management strategies.
- Derivatives instruments; futures and forwards, option payoffs, option valuation, .
- Alternative Investments; hedge funds, mutual funds, ETFs, private equity, real estate, hard commodities and art.
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 30 | 120 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Scheduled Learning and Teaching Activity | 30 | Lectures and Tutorials |
| Guided Independent Study | 120 | Independent study |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| Weekly tutorials consisting of numerical and discussion questions | Weekly 1 hour tutorials throughout the term | 1-13 | Correct solutions and suggested answers. |
| Creation of an Investor Policy Statement and portfolio | This will be developed throughout the module | 1-13 | Suggested answers |
Summative assessment (% of credit)
| Coursework | Written exams | Practical exams |
|---|---|---|
| 50 | 50 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| Written Test | 50 | 1 hour | 1, 4, 5-11 | Cohort wide general feedback and a sample of correct solutions |
| Coursework | 50 | 2000 words | 1-13 | Individual feedback and cohort wide general feedback |
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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 |
|---|---|---|---|
| Written test (50%) | 1 hour test | 1, 4, 5-11 | Aug/Sep |
| Coursework (50%) | Re-submission (2,000 words) (50%) | 1-13 | Aug/Sep |
Re-assessment notes
Deferral – if you have been deferred for any assessment you will be expected to resubmit the relevant assessment. The mark given for a re-assessment taken as a result of deferral will not be capped and will be treated as it would be if it were your first attempt at the assessment.
Referral – if you have failed the module overall (i.e. a final overall module mark of less than 40%) you will be required to sit a further examination. The mark given for a re-assessment taken as a result of referral will count for 100% of the final mark and will be capped at 40%.
Indicative learning resources - Basic reading
• Reilly, F.K. and Brown, K. (2009) Analysis of Investments and Portfolio Management, 9th edition, UK: South-Western.
• Supplementary reading: Assigned research papers and Articles (these will be made available through ELE)
| Credit value | 15 |
|---|---|
| Module ECTS | 7.5 |
| Module pre-requisites | None |
| Module co-requisites | None |
| NQF level (module) | 7 |
| Available as distance learning? | No |
| Origin date | 17/07/2014 |
| Last revision date | 19/09/2023 |
