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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 Arts, Humanities and Social Sciences
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) AvailabilityAvailable to all students
SCQF Credits15 ECTS Credits7.5
SummaryThe focus of this course is on finance theory and empirical evidence that are useful for investment decisions.
Course description 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.

Outline Content

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)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements For Business School PG students only.
Information for Visiting Students
Pre-requisitesFor Business School postgraduate students only.
High Demand Course? Yes
Course Delivery Information
Academic year 2023/24, Available to all students (SV1) Quota:  None
Course Start Semester 1
Timetable Timetable
Learning and Teaching activities (Further Info) Total Hours: 150 ( Lecture Hours 12, Seminar/Tutorial Hours 5, Programme Level Learning and Teaching Hours 3, Directed Learning and Independent Learning Hours 130 )
Assessment (Further Info) Written Exam 70 %, Coursework 30 %, Practical Exam 0 %
Additional Information (Assessment) 30% coursework (Individual) - Assesses all course Learning Outcomes

70% Written Exam (Individual) - Assesses course Learning Outcomes 1, 2, 4
Feedback Formative: Feedback will be provided throughout the course.

Summative: Feedback will be provided on the assessment within agreed deadlines.
Exam Information
Exam Diet Paper Name Hours & Minutes
Main Exam Diet S1 (December)2:00
Learning Outcomes
On completion of this course, the student will be able to:
  1. Rigorously analyse quantitative problems in finance.
  2. Critically interpret financial data in the light of established theories.
  3. Access a wide body of empirical research literature and critically appraise it.
  4. Problems solving using Financial Modelling.
Reading List
Additional Information
Graduate Attributes and Skills Communication, ICT, and Numeracy Skills

After completing this course, students should be able to:

Critically evaluate and present digital and other sources, research methods, data and information; discern their limitations, accuracy, validity, reliability and suitability; and apply responsibly in a wide variety of
organisational contexts.

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.

Identify, define and analyse theoretical and applied business and management problems, and develop approaches, informed by an understanding of appropriate quantitative and/or qualitative techniques, to explore and solve them responsibly.
Course organiserDr Wenxuan Hou
Tel: (0131 6)51 5319
Course secretaryMiss Aoife McDonald
Tel: (0131 6)50 8074
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