Financial Economics & Capital Markets - ECO00004I

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  • Department: Economics and Related Studies
  • Credit value: 20 credits
  • Credit level: I
  • Academic year of delivery: 2022-23

Module summary

This is an introductory module in Finance.

Module will run

Occurrence Teaching period
A Autumn Term 2022-23 to Summer Term 2022-23

Module aims

  • To develop an understanding of the rapidly evolving and exciting theory of finance.
  • To evaluate how close the firms investment, financing and dividend decisions come to an objective of maximising shareholder wealth.
  • To familiarise with financial decision making.
  • To raise awareness of the environment in which financial decisions are made.
  • To provide training in the key issues of capital markets.
  • To understand the importance of risk management in financial markets.

Module learning outcomes

On completing the module students should be familiar with:

  • The time value of money, the notion of compound interest, the definition of the internal rate of return, the valuation of financial instruments and the perpetual growth model.
  • The four criteria that companies use to make investment decisions the net present value rule, the payback rule, the profitability index rule and the internal rate of return rule.
  • The distinct features of main financial instruments including debt, equity and financial derivatives.
  • The general principles of pricing and use of financial instruments.
  • The concepts of market efficiency, portfolio risk and diversification.
  • The characteristic line and the definitions of the equity risk premium.
  • Capital structure, taxes, default and agency problems.

Indicative assessment

Task % of module mark
Online Exam -less than 24hrs (Centrally scheduled) 60
Online Exam -less than 24hrs (Centrally scheduled) 40

Special assessment rules

None

Indicative reassessment

Task % of module mark
Online Exam -less than 24hrs (Centrally scheduled) 60
Online Exam -less than 24hrs (Centrally scheduled) 40

Module feedback

On-line tests will be provided by the end of each lecture week to practice and test the understanding of the material.

Four problem sets will be available in advance of the small group seminars.  Solutions to the four problem sets will be provided after the small group seminars.

A discussion board is available on the VLE where students can ask questions, discuss issues and get feedback.

Indicative reading

Berk and DeMarzo. (2017). Corporate finance. Pearson, Global Edition.