Module convenor: Dr Marcel Prokopczuk20 credits

Introduces techniques for analysing and valuing different classes of risky assets. It also develops ways of optimally selecting portfolios of such assets and develops models of how these portfolios may be priced in financial markets. The techniques introduced in this module are widely applied in other elements of the programme. The module includes simulated trading sessions in our state of the art dealing rooms, where participants are introduced to real world pricing and trading strategies (INVEST sessions).

Outline Content: Financial assets and investing in securities markets; Investors and their objectives; Risk and capital allocation; Optimal portfolio selection; Capital asset pricing model; Single index and multifactor models; Arbitrage pricing theory; Derivative securities and the no-arbitrage principle; Forwards and Futures contracts; Simple hedging; Options basic properties and trading strategies.

Available learning modes:

• Full time
• Flexible learning
• Distance learning

Module convenor: Dr George Alexandridis20 credits

Fixed Income and Equity Investments deals with the valuation of fixed income and equity securities. The module focuses on the basic characteristics of each security and the strategies used for approximating their fundamental value and assessing their risk. Its primary aim is to discuss how certain characteristics and relationships can affect the value of fixed income and equity securities and how can they be exploited to form optimal investment strategies. The analytical techniques introduced in this module are widely applied in other elements of the programme.

Outline Content: An introduction to securities,  Applying time-value-of-money (TVM) and probability theory to value financial instruments,  Bond prices and yields, Introduction to default risk, Term Structure of Interest Rates, Interest rate risk, Active Bond Management,  Economic and Industry analysis, Financial Statement Analysis, Equity Valuation, Behavioural Finance and Technical analysis  

Available learning modes:

• Full time
• Flexible learning
• Distance learning

Module convenor: TBC20 credits

Financial Analysis provides a comprehensive study of ?top-down' fundamental analysis and then allows one to take this framework and apply it to the valuation of financial securities.  The first part of the course takes the student through macro-economics, micro-economics, industry analysis, financial statement analysis and the second part of the course focuses on financial statement analysis and then looks to apply this framework to the corporate valuation decision.  The final objective is to bring together these various disciplines into a single framework for analysis. The analytical techniques taught in this course are very applied, to allow the successful candidates to apply directly to industry either the analysis section (as an equity analyst would do) or the usage of the relative value results as a fund manager or trader would do.

Outline content

Introduction and overview of the framework, and Markets and government

• Aggregate demand, fiscal and monetary policy
• Consumer demand and competitive markets
• Industry analysis and regulation
• The accrual concept and cash flows
• Current assets and inventories
• Long term assets
• Long term finance
• Business investments and combinations
• Pensions and derivatives
• Research project with presentation to class

Module convenors: Dr Alfonso Dufour  | Professor Brian Scott-Quinn  | 20 credits

Provides knowledge of global financial markets, the importance of liquidity, the distinction between exchange versus OTC markets, primary and secondary markets and the role of intermediaries in their various forms. Participants will gain an understanding of: international stock and bond markets, repo markets (for borrowing/lending on a secured basis); an introduction to foreign exchange and money markets, and to futures markets (which are developed in more detail in optional Part 2 modules); finally specific markets for commodity and energy are studied in more detail.

Outline content

• General introduction to world financial markets
• Liquidity, the distinction between exchange versus OTC markets and the role of intermediaries in their various forms
• Short-term debt securities issued by government and corporations
• Classification of bonds according to issuer: government, agencies, corporate and municipa
• Comparison of bond markets in major countries and a description of the main intermediaries and their role
• Foreign exchange market, quotation conventions, types of brokers, central banks? policies
• Primary and secondary stock markets
• Futures markets
• Commodities markets
• Energy markets.

Available learning modes:

• Full time
• Flexible learning
• Distance learning

Module convenor: Dr Ogonna Nneji10 credits

The objective of the module is to give students an introduction to econometrics so that they might understand the analytical techniques used in the finance research literature. Via case studies and computer modelling exercises, students then learn how to apply these techniques to real data. Emphasis is placed on practical applications of the techniques in the global financial markets.

Outline Content: Simple linear regression, Hypothesis testing, Multiple regression: the Classical Linear Regression Model (CLRM), Violations of the CLRM assumptions and diagnosis   

Available learning modes:

• Full time

Module convenor: Dr Carol Padgett20 credits

The objective of the module is to introduce students to the main financial decisions taken by companies, examining how those decisions influence the market's valuation of companies. Outline content: The corporate form and initial public offerings, Valuation: management and measurement of value, Capital budgeting: decisions on fixed assets, Treasury function 1: working capital management and risk management, Treasury function 2: new issues, Treasury function 3: capital structure continued, Dividend policy: dividends and share repurchases, Mergers and acquisitions, De-mergers and leveraged transactions, Bankruptcy.

Available learning modes:

• Full time
• Flexible learning
• Distance learning

Module convenor: Professor Simon Archer20 credits

Provides students with the opportunity to study the application of Shari'ah principles and nominate contracts in the design of financial products and services that are Shari'ah compliant, as well as the risk characteristics of these products and services, with particular reference to Islamic banks and insurance (Takaful) undertakings. Outline content:

• Review of Shari'ah principles - Fiqh al Muamalat
• Islamic banking products and their basis in nominate contracts - Islamic financing (asset side)
• Islamic banking products and their basis in nominate contracts - Islamic funds mobilisation (liabilities & capital side)
• Islamic securities (sukuk)
• Risk management and capital adequacy aspects
• Islamic insurance (Takaful):  its basic principles and basis in Fiqh al Muamalat
• Takaful basic principles and basis in Fiqh al Muamalat
• Supervisory and regulatory considerations

Module convenor: INCEIF Faculty10 credits

Develops deeper analytical and theoretical insights of the two main components that constitute the Islamic financial system and a full comprehension of the various financial systems and institutions that operates in the Muslim countries. Students will be able to demonstrate an appreciation of the historical evolutions of financial institutions and markets. Students should also be able to compare and contrast conventional and Islamic Financial Institutions and also identify the similarities and differences between the approach taken by different countries with Islamic Finance Institutions and markets.

Outline content:

• Functions of Financial Institutions and Markets
• An Overview of the Global Financial System
• The History and development of Islamic Financial Institutions
• The Islamic Financial System of Selected Muslim Countries
• The Islamic Financial Institutions (Covering History & Organisation, Function and Product & Services)
• The Similarities and Differences of Islamic Financial Institutions in Selected Muslim Countries
• Islamic Financial Markets (Covering Function & Organisation, Mechanism, Regulators & Regulations and Development)
• The Monetary Authority / Central Bank.

Module convenor: Professor Simon Archer10 credits

The module provides students with the knowledge required to analyse financial information on Islamic banks and insurance undertakings. Students will develop the skills enabling them to make judgements regarding the financial position and performance of Islamic banks and insurance companies.

Outline content:

1. The financial statements of Islamic banks and insurance undertakings
2. The differences between these and those of conventional banks and insurers
3. Financial reporting issues and standards
4. Evaluating profitability and solvency
5. Valuation techniques for Islamic banks

Available learning modes:

• Full time

Module convenor: Volker Nienhaus10 credits

Provides students with the opportunity to study the juristic basis of Islamic finance, and the nominate contracts that are set out in Islamic commercial jurisprudence (the Fiqh al Muamalat). Students will develop an understanding of the principles of Islamic jurisprudence and its nominate contracts, and how these are applied in Shari’ah compliant financial products and services.

Outline content:

• The origins of Islamic commercial jurisprudence
• Prohibitions to be respected in order for Islamic contracts to be valid:
• Avoidance of riba (pure return on money), maysir (speculation), and gharar (uncertainty or ambiguity of subject matter)
• The frequently used nominate contracts
• Overview of Islamic financial products and their basis in nominate contracts (see Module 255)
• ShariÂ’ah governance of Islamic financial institutions
• The IFSB Guidelines on ShariÂ’ah governance

  Available learning modes:

• Full Time

Available learning modes:

• Full time

Module convenor: Dr Konstantina Kappou10 credits

The module provides an introduction to the basic techniques employed in Financial Engineering. Students will understand how these methods can be applied to design securities with desired payoff characteristics. They will be able to evaluate complex securities by means of reverse engineering and be aware of possible problems when these methods are applied in real world situations. Outline content: Introduction to Financial Engineering, cash flow engineering, basic financial products, interest and forward rates, no-arbitrage and the law of one price; Pricing and hedging by replication, major interest rate (IR) swap structures, IR swaps, currency forwards and cross currencies FX-swaps, options; Structured products, introduction and evaluation; Dynamic strategies for hedging and principal protection; Credit markets: CDS engineering, credit indices and CDO's.

Available learning modes:

• Full time
• Flexible learning

Module convenor: Professor William Ziemba10 credits

Outline content:

• The historical record of stocks, bonds, currencies, gold, etc over the past 100+ years and in the key countries, the US and China: Measuring worldwide risk attitudes, An example of investing in other (non exchange traded) equity assets: the Yale University multi-strategy endowment approach, Prediction markets
• Incentives and risk taking behaviour in hedge funds: the evaluation of regular hedge funds, Can you beat the stock market: the various camps according to WTZ, Arbitrage and risk arbitrage.
• How to evaluate great investors: the downside symmetric Sharpe ratio, Can we predict stock market crashes? The bond-stock earnings yield model
• An attempt to understand the 2007-2009 crash and future scenarios for the recovery, Why did the market crash? Excess derivatives, excess leveraging, excess real estate prices fueled by reckless lending, Why the markets were rallying starting in March 2009 while the economy is still so weak.
• An assessment of the performance and predictive ability of various stock market anomalies 1993-2010 and 2004-2010: what worked and what did not.

Available learning modes:

• Full time

10 credits

International Securities Markets applies general valuation risk assessment methods to: fixed income securities, derivatives and markets. It describes the basic characteristics of each fixed-income security, cash and underlying, and develops practical strategies for finding its value and assessing its risk. It also considers how the markets for these securities are related and begins the task of showing how these relationships can be exploited for trading or investment. The analytical techniques introduced in this module are very applied to allow the successful candidate to apply directly to industry the more theoretical market valuation and risk models learned in other core modules taken in the first term.

Outline: FIxed income Analysis, Rates Trading and Hedging I, Rates Trading and Hedging II, Credit Analysis and Products I, Credit Analysis and Products II

Available learning modes:

• Full time
• Flexible learning
• Distance learning

Module convenor: Mr Keith Dickinson10 credits

Managing Securities Operations is learning about and applying the concept of Operations Management to a financial institution. The course combines teaching about both the technical aspects of securities operations management and theoretical aspects of managing the risks inherent in such as business. It also serves as a base for those interested in further study in operational risk management. The analytics techniques taught in this course serve to synthesise much of the material being taught in the first term core topics of products, markets and institutions by learning how to apply them with regard to management theory. By the end of the module, the student will be able to: Understand how the various securities and derivatives taught in first term courses are traded and operationally managed in a financial institution; they will be introduced to Operations Management theory and how it is applied in a financial institution; they will learn and understand about the many operational market intermediaries that are essential for the investment and trading of securities; they will learn to create and manage securities databases; they will reinforce their knowledge about securities pricing and the various legal and market practices that impact settlement prices; they will understand the full “life cycle of a trade” and how it is managed at a senior management level. They will be introduced to the many and varied new regulatory frameworks being incorporated into the market (Basle II, etc.).

Outline content

• Essential operational management concepts

• The operational structure of a securities trading organisation
• The many types of securities transactions
• Understanding the trade life cycle - post trade
• Understanding the trade life cycles - funding
• Operational risks and how to manage them.

Available learning modes:

• Full time
• Flexible learning

Module convenor: Miss Deepa Govindarajan10 credits

This 10-credit optional module will provide and overview and understanding of purpose and operation of financial regulation, and the consequences of reform for different markets, including those of the students' home country. The module aims to deliver a broad insight into the key challenges for regulation within the financial sector and approaches to enhanced regulation of the financial sector. We will challenge current and past thinking on regulatory structures and concepts especially in the context of the recent financial crisis, which provides us with a rich source of information on the pros and cons of various options. We will examine the risks and issues different stakeholders confront when interacting with financial firms. Through these topics we will examine how financial firms should be regulated. In parallel we will set out the historical context and theoretical basis of regulation. We also look at the practicalities of regulation and the roles of various key regulators both domestically and internationally. This includes the Basel Committee, EBA, EIOPS and ESMA, national regulators (both in the developed and the developing world), sector regulators for banking, insurance, asset management and securities, the European Commission and others. We will then evaluate how regulation helps address risk and ensure stakeholder interests are given due protection. We will also study the impact on the compliance and risk management functions within financial firms. One of the key aims is to provide students with the broader regulatory skills and knowledge required to work within the financial services industry. We will also aim to gain an understanding of the role and working of risk management, compliance, internal audit and allied functions in financial firms. The module will include a discussion of:

• Regulatory Objectives
• Structure and nature of regulators - the theory of regulation
• Regulatory context - the crisis
• Regulatory strategies - what are we trying to legislate for
• Regulating risk - Prudential and conduct of business issues
• Governance and culture
• Systems and control
• Regulation today and regulatory objectives
• Compliance, risk management, audit and finance - roles and responsibilities
• Can regulators rely on these functions - how to test their efficacy
• The Challenges ahead

  Key regulatory initiatives studied include:

• Dodd-Frank
• Basel 2 and beyond
• Solvency 2
• UCITS
• MiFID
• PSD

Available learning modes:

• Full time
• Flexible learning
• Distance learning

Module convenor: Professor Adrian Bell10 credits

This module aims to provide students with an understanding of the origins of Financial Markets, and with a broader appreciation of the early development of products and innovations in Finance - which many assume are recent twentieth century inventions. By the end of the module it is expected that the student will be able to:

• Identify and explain key issues and events in the History of Finance

• Acquire a detailed knowledge of the events through extensive reading in specialised literature

• Locate and assemble information on the subject by independent research

• Appraise critically the primary sources and historical interpretations of the subject

• Organise material and articulate arguments effectively in writing, both under timed conditions and in assessed essays.

 

Outline content

The module will focus on topics that can throw light on the development of financial markets over time. It is not restricted by date, but will draw mainly upon Medieval Europe for its focus. Topics will include:

• Forward Contracts for the supply of Wool in the 13th Century
• Early Italian Merchant Banks - Riccardi, Bardi
• The English Company of 1339
• The South Sea Bubble - John Law
• War Finance
• Tulip Mania

Available learning modes:

• Full time
• Flexible learning