MSc Investment Banking and Islamic Finance
Programme Content Part 1 (Compulsory Modules)

  • Securities, Futures and Options
  • Fixed Income and Equity Investments
  • Financial Analysis
  • Financial Markets
  • Introductory Quantitative Methods (not for credit)

Securities, Futures and Options

Convenor: John Board
Credits: 20

Aims:

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 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
  • Option pricing

Fixed Income and Equity Investments

Convenor: John Evans
Number of credits: 20

Aims:

Applies general valuation methods to specific financial instruments: fixed income and equity securities. It describes the basic characteristics of each security and develops practical strategies for finding its value and assessing its risk. It develops general trading strategies for each type of security. It also considers how the markets for these securities are related and begins the task of showing how these relationships can be exploited to form an optimal investment strategy.

Outline Content:

  • Sovereign and corporate bonds: Characteristics, prices and yields
  • The Term and risk structure of interest rates
  • Bond risk
  • Bond management: Active and passive strategies
  • Credit and credit default swaps
  • Securitisation
  • Top down fundamental management: Economic and industry analysis
  • Equity valuation I: Dividend growth, P/E ratios and earnings multiples
  • Financial statement analysis
  • Equity valuation II: Estimating share price and market strategies
  • Empirical evidence on market efficiency

Financial Analysis

Convenor: John Evans
Credits: 20

Aims:

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.  Markets and government.
  • Aggregate demand, fiscal and monetary policy.
  • Consumer demand and competitive markets.
  • Industry analysis and regulation.
  • The accrual concept and cash flows.
  • Mid-term 1 (topics 1 - 4).
  • Current assets and inventories.
  • Long term assets.
  • Long term finance.
  • Mid-term 2 (topics 5 - 8).
  • Business investments and combinations.
  • Pensions and derivatives.
  • Research project due and presentation to class.

Financial Markets

Convenor: Alfonso Dufour
Number of credits: 20

Aim:

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: geographically, by type of exchange, by issuers, liquidity and type of instruments
  • 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 municipal
  • 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. Market mechanics including types of orders, market participants, margin and short trades
  • Futures markets: a comparison of the main exchange traded markets, options on futures, specifications of the most popular contracts, trade orders for futures contracts, mark-to-market procedure, and various expiration conventions
  • Commodities markets: Specific features, delivery and settlement methods, backwardation and contango, short squeezes and regulations
  • Energy markets: price risks of oil and gas, electricity, coal