| Unit name | Financial Markets and Investments |
|---|---|
| Unit code | EFIMM0018 |
| Credit points | 15 |
| Level of study | M/7 |
| Teaching block(s) |
Teaching Block 2 (weeks 13 - 24) |
| Unit director | Dr. Ho |
| Open unit status | Not open |
| Pre-requisites |
ECONM1007 Finance and Accounting |
| Co-requisites |
None |
| School/department | School of Accounting and Finance - Business School |
| Faculty | Faculty of Social Sciences and Law |
This unit aims to provide students with a deeper understanding of financial markets and introduce them to contemporary issues in a financial market. The unit begins with an introduction of financial markets and instruments such as equities, bonds, and derivatives, and discusses the trading strategies related to these financial instruments. Students are also introduced to topics on financial analysts, funds managers, and foreign exchange market. Then, the unit introduces students to the efficient market hypothesis and extends their knowledge of popular asset pricing models covered in ECONM1007 Finance and Accounting by carefully discussing the advantages and disadvantages of models such as the CAPM and APT. Finally, this unit introduces topics of contemporary issues in financial markets, including but not limited to, the arguments against the efficient market hypothesis, behavioural finance and their roles in the recent financial crisis.
On successful completion of this unit a student will be able to:
Understand the pricing and use of the main classes of financial instruments such as equities, bonds, forwards, options and swaps;
Understand issues related to the efficient market hypothesis, behavioural finance and the recent financial crisis;
Demonstrate an understanding of the strengths and weakness of the CAPM and APT models.
20 contact hours, including 14 hours of lectures and 6 hours split between exercise lectures and tutorials.
Summative: The unit is assessed via a three-hour examination in May/June (100%). The exam will contain a mix of essay and numerical questions. The numerical questions will test the students’ ability to apply pricing methods and trading strategies they have learnt based on the information provided about the financial instruments. These questions will also test students’ understanding of the application of APT and CAPM models. The essay questions are designed to test students’ reasoning skills and knowledge of financial markets and topics such as efficient market hypothesis, behavioural finance and financial crisis.
Formative: Students will attempt a set of tutorial questions and tutors will select students’ works to mark and give feedbacks.
Core textbook
Bodie, Kane and Marcus, Investments, McGraw-Hill.
Important reference
Hull, Options, Futures, and Other Derivatives, Prentice Hall.
Academic journals, including Journal of Finance and Journal of Economic Perspectives
