School of Economics, Finance and Business
MODULE CODE: ECON 41215 MODULE NAME: Advanced Financial Theory October 2013
PLEASE RETAIN THIS HANDBOOK FOR FUTURE REFERENCE. IT MAY BE REQUIRED FOR SUBMISSION TO PROFESSIONAL BODIES WHEN APPLYING FOR EXEMPTION FROM EXAMINATIONS.
Contents
Teaching Staff 3
Module Information
Delivery Mechanisms & Assessment
Module Outline & Reading
Duo
Seeking Help
N.B. This handbook is intended for the guidance of students taking this module in 2013/2014. Whilst the details contained in this handbook represent teaching staff intentions at the time of writing, it is in the nature of higher education that some module information, such as syllabus, reading lists and assignments, may be subject to modifications during the teaching of a module. Teaching staff reserve the right to make such minor changes in the matters covered by this publication and will endeavour to publicise any such changes as widely and timely as possible. 2
Teaching Staff
Lecturer Dr. Damian S. Damianov 0191 33 45528 [Link]@[Link]
Lecturer & Class Tutor
Michael Lucey 0191 33 40110 [Link]@[Link]
Class Tutor
Qingjing Zhang [Link]@[Link]
Office hours will be posted on Duo.
Module Information
Module Aims To provide a rigorous grounding in the theory of modern finance at an advanced level and a thorough synthesis of the most important current research in finance, with an emphasis on the applications of the principles. To examine both the normative and positive aspects of financial theory, together with supporting descriptive and empirical evidence.
Learning Outcomes Upon completion of this module, students should: have advanced knowledge and critical understanding of essential components of modern finance theory and associated current research; have explored, understood and appreciated the complexity and contradictions of the current academic literature and its implications for professional practice, and be able to identify open questions for their own research; understand how finance theories are tested and evaluated empirically have the ability to learn and work independently in finance, using their knowledge of theoretical and empirical finance to make reasonable judgements pertaining to investment decisions; be able to use highly specialised and advanced technical, professional and academic skills in the analysis of relevant specific problems in finance; be able to apply problem solving and analytical skills to issues in finance in a complex specialised context; be able to consider any additional learning outcome that the course might facilitate.
In addition, you will have the opportunity to develop the following key skills:
Written Communication; Planning, Organising and Time Management; Problem Solving and Analysis; Using initiative; Numeracy; Computer Literacy.
Delivery Mechanisms & Assessment
A combination of lectures, seminars and guided reading will contribute to achieving the aims and learning outcomes of this module. The summative written examination will test students' knowledge and critical understanding of the material covered in the module, their analytical and problem-solving skills. Teaching Methods and Contact Hours
Activity Lectures Seminars
Number Frequency 10 1 Per Week 4 Fortnightly
Duration 2 hours 1 hour
Total/Hours 20 4
Summative Assessment
Component: Examination Element Length / duration Written Examination 2 hours
Component Weighting: 100% Element Weighting 100%
Formative Assessment
Students will receive feedback on formative assignments which will involve solving problems and answering questions on Duo.
Note: Attendance at all activities marked with this symbol will be monitored. Students who fail to attend these activities, or to complete the summative or formative assessment specified above, will be subject to the procedures defined in the University's General Regulation V, and may be required to leave the University. 5
Duo
Teaching staff will place information on Duo as appropriate. All students are expected to consult the modules Duo site regularly. Whilst some lecture notes and other useful/supporting information may be placed on Duo, students should note that this material is intended as a useful complement to, and not a substitute for, attendance at lectures. In particular, not everything covered in lectures will be available on Duo. The teaching team may also choose to use the whiteboard and/or visualiser to present elements of topics, for example building up diagrams whilst discussing the meaning, so as to aid student understanding. Other examples might include working through numerical examples step-by-step. Naturally, students are expected to take notes as such material will not normally be replicated on Duo.
Module Outline & Reading
The module will be structured in two sections (for the purposes of giving a definitive module outline), however, the topics covered in each section will at times overlap and interlink. Module Outline Section I Traditional Financial Theory 1. Capital Markets, Consumption and Investment (Ch. 1&2) 2. Theories of Choice under Uncertainty (Ch. 3) 3. State Preference Theory (Ch. 4) 4. Mean-Variance Portfolio Theory (Ch. 5&6) 5. The Capital Asset Pricing Model (Ch. 5&6) Section II Behavioral Theories and Market Anomalies 6. Rolls Critique, Empirical Tests of CAPM & Arbitrage Pricing Theory 7. Efficient Market Hypothesis 8. Factor Models: Fama & French, Carhart & Mutual Fund Performance 9. Investor Irrationality 10. Behavioural Portfolio Theory
Core Text The core text for Section I or the module is: Thomas Copeland, J. Fred Weston, Kuldeep Shastri (2005), Financial Theory and Corporate Policy, 4th Edition, Addison-Wesley There is no core text for Section II of the module, as much of the material will come from key academic papers in the area. However, students, not from a financial background, may find it beneficial to consult the following textbook: Bodie, Kane & Marcus Investments, McGraw-Hill
Seeking Help
All members of the teaching team will have consultation hours where they will be pleased to talk to students. The days/times of consultation hours will be posted on Duo. If you wish to ask questions about the material you should first talk to your seminar tutor in their consultation hour and, where appropriate, the consultation hour of the lecturer delivering that part of the module. Normally, your tutors will expect you to have devoted some study time to addressing problems yourself first and they will want to ascertain your understanding (e.g. rather than simply providing answers to numerical problems). Seminars also provide a good opportunity to discuss any questions you might have with your peers and the seminar leader. Overall problems, general enquiries or concerns relating to the module should be brought to the attention of the Module Leader as soon as possible. If you have serious problems that relate more generally to your studies across this and other modules please see the Programme Handbook for guidance. In such cases, you should normally see your Course Leader or, for issues relating to assessment, the Chair/Deputy Chair of the Board of Examiners. However, full details of the support mechanisms that are in place are available in the Programme Handbook.
