Module BUSI42815: THEORY OF FINANCE

Department: Economics, Finance and Business (Business)

BUSI42815: THEORY OF FINANCE

Prerequisites

• None

Corequisites

• None.

Excluded Combination of Modules

• None.

Aims

• The main aim of this module is to provide a rigorous grounding in the theory of modern finance at an advanced level and a thorough synthesis of the most important current research in finance , with an emphasis on the applications of the principles and relevance of the theory to the practice of financial management. Both normative and positive aspects of financial theory are examined, together with supporting descriptive and empirical evidence.

Content

• Introduction to the financial sector and finance theory (principles and focus on valuing financial instruments and explaining the behaviour of individual investors, corporations, financial institutions and markets
• Consumption and investment decisions and the valuation of risky future cashflows
• Investment decisions and capital budgeting
• Choice under uncertainty, diversification and portfolio theory
• Equilibrium asset pricing models: CAPM, recent developments and applications
• The valuation of bonds and other debt instruments
• Introduction to options and futures contracts and markets
• Corporate valuation
• The efficient market hypothesis
• Pricing anomalies and recent developments

Learning Outcomes

• By the end of the module students should have:
• Advanced knowledge and critical understanding of essential components of modern finance theory and associated current research.
• Explored, understood and appreciated the complexity and contradictions of the current academic literature and its implications for professional financial management practice.
• Demonstrated ability to learn and work independently in finance, exercising critical judgement and discrimination in the resolution of complex problematic situations.

• Used highly specialised and advanced technical, professional and academic skills in the analysis of relevant specific problems in financial management.
• Had the opportunity to apply problem solving and analytical skills to issues in financial management in a complex specialised context.

• Written Communication.
• Planning, Organising and Time Management.
• Problem solving and analysis.
• Using initiative.
• Numeracy.
• Computer Literacy.

Modes of Teaching, Learning and Assessment and how these contribute to the learning outcomes of the module

• Combination of lectures; students' presentations and discussions in seminars will contribute to achieving the aims and learning outcomes of this module. Summative assessment by written examination will test students' knowledge and understanding of the subject-matter, their critical judgement and problem-solving skills.

Teaching Methods and Learning Hours

Summative Assessment

Formative Assessment:

Students will receive written comments on a formative assignment. Additional formative assessment, and feedback, may take a number of forms such as oral feedback on work prepared by students for seminars; answers to questions either discussed during a seminar, or posted on DUO; discussions with teaching staff during consultation hours, or via e-mail.

■ Attendance at all activities marked with this symbol will be monitored. Students who fail to attend these activities, or to complete the summative or formative assessment specified above, will be subject to the procedures defined in the University's General Regulation V, and may be required to leave the University