Undergraduate Course: Investment and Securities Markets (BUST10032)
||College||College of Arts, Humanities and Social Sciences
|Credit level (Normal year taken)||SCQF Level 10 (Year 3 Undergraduate)
||Availability||Available to all students
|Summary||The course begins with an overview of securities markets. It then covers the Modern Portfolio Theory and the Single-Index Model. The Capital Asset Pricing Model is discussed next. The second half of the course focuses on the areas of market efficiency, behavioural finance, and international investing.
This course is restricted to MA Accounting and Finance; MA Finance and Business; MA Economics with Finance programmes only. Year 3 MA Business with Strategic Economics students are also permitted to take this course.
The course aims to develop an understanding of the theory and practice of investment and securities markets. It provides the concepts and tools which will help graduates cope in the increasingly sophisticated investment markets. Discussion of academic research is combined with an emphasis on practical application. Succeeding in the course depends on solid understanding and ability to apply the tools of statistical hypothesis testing, linear regression, calculus and optimization. The first half of the course involves numerous derivations and in-depth understanding of three key finance models: Markowitz portfolio optimization model, Single Index Model and Capital Asset Pricing Model. The second half of the course involves high level discussion and comparison of these different theoretical models and their extensions.
- overview of securities markets;
- introduction to risk and return;
- optimal risky portfolios;
- index models;
- the Capital Asset Pricing Model;
- the Efficient Market Hypothesis;
- behavioural finance and technical analysis;
- empirical evidence on security returns;
- international diversification.
STUDENT LEARNING EXPERIENCE
The lectures provide an overview of each topic together with brief discussion of one or two journal articles relating to that topic. The student learning comes from reading the chapters of books, finance texts and journal articles recommended, practicing assigned exercises and answering test questions.
Students need mathematical (basic optimization), statistical (hypotheses tests) and econometric (regression interpretation) knowledge to be able to do the work in this class.
The assessed coursework comprises weekly tests that require students to show mastery of taught concepts, solve problems, perform quantitative analysis and discuss assigned financial texts and academic literature in relation to the covered material.
Entry Requirements (not applicable to Visiting Students)
|| Students MUST have passed:
Introduction to Corporate Finance (BUST08030)
||Other requirements|| This course is restricted to MA Accounting and Finance; MA Finance and Business; MA Economics with Finance programmes only.
Year 3 MA Business with Strategic Economics students are also permitted to take this course.
Information for Visiting Students
|Pre-requisites||Visiting students must have at least 4 Business courses at grade B or above. This MUST INCLUDE
at least two Finance courses at introductory level and at least one Finance course at intermediate
level. In addition, students must have at least one Statistics course at intermediate level or
Econometrics course at introductory level; and at least one Calculus or Optimization course at
introductory level. This course cannot be taken alongside BUST08003 Principles of Finance or
BUST08030 Introduction to Corporate Finance. We will only consider University/College level
|High Demand Course?
Course Delivery Information
|Academic year 2020/21, Available to all students (SV1)
|Learning and Teaching activities (Further Info)
Lecture Hours 20,
Summative Assessment Hours 2,
Programme Level Learning and Teaching Hours 4,
Directed Learning and Independent Learning Hours
|Additional Information (Learning and Teaching)
The contact hours comprise 10 lecture sessions (5*2 = 10 hours)
|Assessment (Further Info)
|Additional Information (Assessment)
||Assessment will be by:-
40% coursework: 8 online tests (40%) , best 6 out of 8
60% final exam (30% short answer questions; 30% research and critical analysis of data and results)
It will be a combination of some multiple-choice questions, short answer question, and long calculation questions.
The exam will be a 24 hour take-home exam as per University guidelines.
||Coursework marks will be published via Learn. Coursework feedback will be provided via Learn.
Examination marks will be posted on Learn (together with generic feedback and examination statistics) as soon as possible after the Boards of Examiners meeting (normally end of January/beginning of February).
||Hours & Minutes
|Main Exam Diet S1 (December)||2:00|
On completion of this course, the student will be able to:
- Understand and critically discuss the concepts and tools employed in institutional investment and securities markets.
- Understand and critically discuss the current issues and debates relating to topics covered in the course.
- Understand and critically discuss academic research methods relating to investment and securities markets.
- Discuss critically the contribution of financial market theory to the institutional investment process.
|The main text for the course is|
Bodie, Z., Kane, A. and Marcus, A.J. 'Investments', 12th Edition 2020, McGraw-Hill
The text recommended for further reading is
Elton, J.E., Gruber, M.J., Brown, S.J., and Goetzmann, W.N. 'Modern Portfolio Theory and Investment Analysis', 9th Edition 2014, Wiley
- Overview of securities markets: BKM Chapters 1-4, EGBG Chapters 1-3
- Introduction to risk and return: BKM Chapters 5-6, EGBG Chapter 4
- Optimal risky portfolio: BKM Chapter 7, EGBG Chapters 5-6
- Index models: BKM Chapter 8, EGBG Chapters 7-8
- The Capital Asset Pricing Model: BKM Chapter 9, EGBG Chapter 13
- The Efficient Market Hypothesis: BKM Chapter 11, EGBG Chapter 17
- Behavioral finance and technical analysis: BKM Chapter 12, EGBG Chapter 18
- Empirical evidence on security returns: BKM Chapter 13, EGBG Chapter 15
- International diversification: BKM Chapter 25, EGBG Chapter 10
|Graduate Attributes and Skills
||On completion of the course students should be able to:
- demonstrate that they can follow complex lines of argument
- demonstrate that they can write answers to essay-type questions
|Course organiser||Dr Maria Boutchkova
Tel: (0131 6)51 5314
|Course secretary||Ms Claire McCullough
Tel: (0131 6)51 3798