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DEGREE REGULATIONS & PROGRAMMES OF STUDY 2011/2012
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DRPS : Course Catalogue : Business School : Common Courses (Management School)

Postgraduate Course: Foundations of Finance Theory (CMSE11081)

Course Outline
SchoolBusiness School CollegeCollege of Humanities and Social Science
Course typeStandard AvailabilityAvailable to all students
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) Credits15
Home subject areaCommon Courses (Management School) Other subject areaNone
Course website None Taught in Gaelic?No
Course descriptionThe focus of this course is on the financial theory and empirical evidence that are useful for investment decisions. The topics covered in this course can be broadly categorized into thre groups:
& Corporate Finance and Financial Theories
This includes cost of capital, capital structure, equity issuance and valuation, dividend policy, portfolio theory, the capital asset pricing model and the arbitrage pricing theory, all of which have become an integrated part of the decision-making in investments.
& Empirical Evidence in the Equity and Equity Options Markets
This includes patterns in cross-sections of stock returns, the time-series behavior of stock returns time-varying expected returns, and further empirical evidence from the equity options market.
& Introduction to Fixed-Income and Derivative Instruments
This includes bonds, derivatives, fixed-income derivatives such as swaps.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements None
Additional Costs None
Information for Visiting Students
Pre-requisitesNone
Displayed in Visiting Students Prospectus?No
Course Delivery Information
Delivery period: 2011/12 Semester 1, Available to all students (SV1) WebCT enabled:  Yes Quota:  None
Location Activity Description Weeks Monday Tuesday Wednesday Thursday Friday
No Classes have been defined for this Course
First Class First class information not currently available
Exam Information
Exam Diet Paper Name Hours:Minutes
Main Exam Diet S1 (December)Foundations of Finance Theory2:00
Summary of Intended Learning Outcomes
Subject-specific Skills: On completing the module, students should

& Understand the concepts of risk and return in financial markets;
& Be able to construct portfolios that are efficient in the sense that they maximise expected return for a given level of risk, or equivalently, minimise risk for a given expected return;
& Have a detailed knowledge of asset pricing models, including the capital asset pricing model and the arbitrage pricing theory; be aware of the empirical research that attempts to evaluate the validity of these models;
& Be able to determine the equilibrium expected return of an investment.
& Understand the principles of market efficiency; be aware of the empirical evidence on market efficiency.
& Be able to compute the price off bonds, futures and options.
& understand arguments and debates concerning the topics covered in the corporate finance area
& have developed their understanding of certain methods of research in finance, for example analysis of numerical data
& have a knowledge of theoretical and empirical academic research in corporate finance


Core Academic Skills: This module will develop in students the ability to

& Rigorously analyse quantitative problems in finance;
& Interpret financial data in the light of established theories;
& Access a wide body of empirical research literature and to critically appraise it.


Personal and Key skills: This module will develop in students the ability to

& Analyse and evaluate quantitative problems;
& Implement solutions to these problems using a spreadsheet;
& Work independently and as part of a group.
Assessment Information
There is one group assignment which counts for 30% of the total mark (written report) and a final two hour exam which counts for 70% of the total mark.
Special Arrangements
None
Additional Information
Academic description Not entered
Syllabus Not entered
Transferable skills Not entered
Reading list Not entered
Study Abroad Not entered
Study Pattern Not entered
KeywordsFFT
Contacts
Course organiserDr Maria Michou
Tel: (0131 6)50 8341
Email: Maria.Michou@ed.ac.uk
Course secretaryMs Sarah Jack
Tel: (0131 6)51 3854
Email: Sarah.Jack@ed.ac.uk
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© Copyright 2011 The University of Edinburgh - 16 January 2012 5:49 am