Postgraduate Course: Foundations of Finance Theory (CMSE11081)
||College||College of Arts, Humanities and Social Sciences
|Credit level (Normal year taken)||SCQF Level 11 (Postgraduate)
||Availability||Available to all students
|Summary||The focus of this course is on finance theory and empirical evidence that are useful for investment decisions.
This course aims to develop students' understanding of the basic principles of financial markets and provides a very good foundation on how assets are valued and traded. The course considers stock market prices and returns; stock market risk and the influence of risk on the pricing of shares; interest rates and the pricing of bonds; and the characteristics and pricing of financial futures and options. It also considers Corporate Finance and Financial Theories. But the most important contribution of this course to your future career is how to use the academic insights to better assess risks and returns, and the trade-off between the two in your future decision making.
Scientific insights develop and change over time. Traditional views on financial markets are changing rapidly and many of the standard paradigms and theory are nowadays questioned. On the one hand because of recent developments like the recent financial crisis, on the other hand because of new theoretical and empirical developments in the academic literature. This course aims to consider issues from both theoretical perspective as well as practical perspective. It will address both the standard theory but also offer some of the new and alternative views. It is important to be aware of the most well used theoretical models from a practical point of view but it is also important for students who want to follow an academic career.
The topics covered in this course can be broadly categorised into three groups:
*Financial Theories. This includes 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. It will also discuss patterns in cross-sections of stock returns, the time-series behaviour of stick returns time-varying expected returns.
*Introduction to Fixed-Income and Derivative Instruments. This includes bonds, options and futures.
*Corporate Finance: This includes capital budgeting, cost of capital, capital structure.
Entry Requirements (not applicable to Visiting Students)
||Other requirements|| For Business School PG students only, or by special permission of the School. Please contact the course secretary.
Information for Visiting Students
|Pre-requisites||Business School postgraduate students only.
|High Demand Course?
Course Delivery Information
|Academic year 2022/23, Available to all students (SV1)
|Learning and Teaching activities (Further Info)
Lecture Hours 12,
Seminar/Tutorial Hours 5,
Programme Level Learning and Teaching Hours 3,
Directed Learning and Independent Learning Hours
|Assessment (Further Info)
|Additional Information (Assessment)
||30% coursework (individual) - assesses all course Learning Outcomes
70% exam (individual) - assesses course Learning Outcomes 1, 2, 4
||Summative: students will be provided individual feedback on the coursework assignment and generic feedback for the exam.
Formative: students will gain feedback on their understanding of the material when they discuss their answers to the tutorial questions in the tutorials. Students may also ask questions in classes to assess their knowledge.
||Hours & Minutes
|Main Exam Diet S1 (December)||3:00|
On completion of this course, the student will be able to:
- Rigorously analyse quantitative problems in finance.
- Critically interpret financial data in the light of established theories.
- Access a wide body of empirical research literature and critically appraise it.
- Problems solving using Financial Modelling.
|Graduate Attributes and Skills
||Knowledge and Understanding
After completing this course, students should be able to:
Demonstrate a thorough knowledge and understanding of contemporary organisational disciplines; comprehend the role of business within the contemporary world; and critically evaluate and synthesise primary and secondary research and sources of evidence in order to make, and present, well informed and transparent organisation-related decisions, which have a positive global impact.
|Course organiser||Dr Chao Yin
|Course secretary||Miss Aoife McDonald
Tel: (0131 6)50 8074