Programme Content Part 1 (Compulsory Modules)

Securities, Futures and Options

Convenor: Professor Chris Brooks     Credits: 20

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.

Outline Content: Financial assets and investing in securities markets; Investors and their objective; 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; Option pricing.

Fixed Income and Equity Investments

Convenor: Dr George Alexandridis and John Evans    Credits: 20

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 they can be exploited to form optimal investment strategies.

Outline Content: An Introduction to Debt Markets; Bond Prices and Yields; Term Structure of Interest Rates; Interest Rate Risk; Active Bond Management; Credit Risk; Economic and Industry analysis; Financial Statement Analysis; Equity Valuation; Behavioural Finance and Technical analysis.

Quantitative Methods for Finance

Convenor: Professor Carol Alexander     Credits: 20

The objective of the module is to give students a thorough grounding in the essential mathematics required for their Part II modules. The course is focussed uniquely on financial applications, with all the main concepts illustrated by numerous examples and Excel spreadsheets. The very high practical content will make it accessible to all students, even those with little previous training in mathematics.

Outline Content: Foundations; Descriptive Statistics; Calculus; Linear Algebra; Probability Theory in Finance; Regression; Numerical Methods

Financial Analysis

Convenor: John Evans    Credits: 20

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.