Module ECON45015: ADVANCED FINANCIAL THEORY (TAUGHT)

Department: Economics and Finance

ECON45015: ADVANCED FINANCIAL THEORY (TAUGHT)

Prerequisites

• One module at a level equivalent to a second year British Honours Degree standard, covering statistics and in particular covering at least probability theory and distributions as well as hypothesis testing.

Corequisites

• None

Excluded Combination of Modules

• Advanced Financial Theory (Online) - ECON44915

Aims

• 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.
• both normative and positive aspects of financial theory are examined, together with supporting descriptive and empirical evidence.

Content

• The Role of Financial Theory and undertaking research in Finance;
• Capital Markets, Consumption and Investment;
• The Theory of Choice under Uncertainty and Valuation Theories;
• Portfolio Theory;
• Developing ethical models for financial markets
• Equilibrium Asset Pricing Models I - CAPM and its recent developments;
• Equilibrium Asset Pricing Models II – tests of the CAPM; ICAPM and CCAPM;
• Equilibrium Asset Pricing Models III – APT and its testing;
• Capital Market Efficiency, Market Anomalies and Behavioural Finance;
• Pricing of State Contingent Claims, the Arbitrage Theorem and Continuous Time Valuation;
• Derivative Instruments and Option Valuation.
• Students are exposed to the frontier of theoretical and applied research in the module, as well as seminal papers.
• Students use library facilities in searching and reviewing the research literature in finance, in particular for student presentations in webinars.
• Within topics, research questions and hypotheses in finance are posed, and how to methodologically approach these, in particular theoretical research techniques.

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;
• have explored, understood and appreciated the complexity and contradictions of the current academic literature and its implications for professional practice, and be able to identify open questions for their own research;
• have the ability to learn and work independently in finance, exercising critical judgement and discrimination in the resolution of complex problematic situations.

• By the end of the module, students should: 
• be able to use highly specialised and advanced technical, professional and academic skills in the analysis of relevant specific problems in finance; 
• be able to apply problem solving and analytical skills to issues in finance in a complex specialised context.

• planning, organising and time management skills
• problem solving and analytical skills
• the ability to use initiative
• advanced skills in the interpretation of data
• advanced computer literacy skills

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

• Learning outcomes will be met through a combination of taught input, groupwork, case studies and discussion, supported by guided reading and specially-written self-study material. 
• The summative assessment of the module is an essay which will test students' specialist knowledge and critical understanding of the material covered in the module, their analytical and communication skills.

Teaching Methods and Learning Hours

Summative Assessment

Formative Assessment:

Group-based discussions and case study exercises.

■ 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