Financial Markets and Decisions I
| Module title | Financial Markets and Decisions I |
|---|---|
| Module code | BEE2027 |
| Academic year | 2024/5 |
| Credits | 15 |
| Module staff | Dr Olayinka Oyekola () |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 11 |
| Number students taking module (anticipated) | 240 |
|---|
Module description
This course is the first in a two-part series on the economics of finance. The pair of modules BEE2027 and BEE3034 present the theory of decision-making under risk and the economics of information, discussing applications of the theory in the areas of banking and finance.
This module, Financial Markets and Decisions I is divided in two parts:
- the first part deals individual decision making over time and under uncertainty.
- the second part links individual behaviour to financial markets and equilibrium, including risky assets, micro-foundations of CAPM, and the efficient market hypothesis.
The module will also include an introduction to behavioural finance.
Internationalisation
The module content is globally relevant as it discusses financial markets theoretically, international trends in asset pricing models used by the majority of firms, and comparative studies through up-to-date research.
Employability
You will acquire several skills valued by employers, including a theoretical knowledge, and understanding of financial markets, the application of theory, the ability to think like an economist, and designing firm level policies
Module aims - intentions of the module
This course aims to describe the theoretical foundations of the economic frameworks that are used to study important issues in Finance. Financial markets are characterised by risk, time, and uncertainty. The role of risk, time, and uncertainty in the decision-making of various agents participating in financial markets will be studied in detail.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. apply economic analysis to asset pricing and decision-making under risk and uncertainty.
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 2. explain the basic asset pricing equation and decision-making by agents under conditions of risk and uncertainty and the consequences of these decisions in the financial markets;
- 3. critically analyse the arguments made in support of CAPM and The Efficient Markets Hypothesis;
- 4. develop an understanding of the concepts of finance theory and its limitations.
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 5. think analytically about financial markets and firms;
- 6. Demonstrate technical knowledge and skills without reference to external sources of information or other resources.
Syllabus plan
- Decision making over time
- Decision making under uncertainty
- Mean-Variance preferences
- Consumption-Based Asset Pricing
- Equity Premium Puzzle
- CAPM foundations
- Perfect Markets
- Efficient Markets Hypothesis
- Behavioural Finance
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 25 | 125 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Scheduled Learning and Teaching Activities | 25 | Lectures and Seminars |
| Guided Independent Study | 125 | Reading, preparation for classes and assessments |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| Problem sets for each topic and a revision sheet after all topics are completed. | 1 hour | 1-6 | Written and verbal feedback after students have had the chance of going through the problem sheets on their own |
Summative assessment (% of credit)
| Coursework | Written exams | Practical exams |
|---|---|---|
| 0 | 100 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| Mid-term test | 30 | 60 minutes | 1-6 | Written or oral feedback |
| Examination | 70 | 90 mins | 1-6 | Written or oral feedback |
Details of re-assessment (where required by referral or deferral)
| Original form of assessment | Form of re-assessment | ILOs re-assessed | Timescale for re-assessment |
|---|---|---|---|
| Mid-term test (30%) | Mid-term test (60 mins, 30%) | 1-6 | Referral/Deferral Period |
| Examination (70%) | Examination (90 mins, 70%) | 1-6 | Referral/Deferral period |
Re-assessment notes
Deferral – if you have been deferred for any assessment you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of deferral will not be capped and will be treated as it would be if it were your first attempt at the assessment.
Referral – if you have failed the module overall (i.e. a final overall module mark of less than 40%) you will be expected to submit the relevant assessment. The mark given for a re-assessment taken as a result of referral will be capped at 40
Indicative learning resources - Basic reading
Core material
- Varian, H. (2014) Intermediate Microeconomics: A Modern Approach (9th Edition), W.W. Norton & Company.
- Workouts in Intermediate Microeconomics (9th Edition) by Bergstrom and Varian
- Berk and DeMarzo (2020) Corporate Finance (5th Edition), Pearson Education
- Bodie, Kane & Marcus (2021) Investments (12th edition), McGraw-Hill.
| Credit value | 15 |
|---|---|
| Module ECTS | 7.5 |
| Module pre-requisites | None |
| Module co-requisites | BEE2025 |
| NQF level (module) | 5 |
| Available as distance learning? | Yes |
| Origin date | 19/11/2013 |
| Last revision date | 05/02/2024 |
