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University of Exeter Business School

Financial Instruments

Module titleFinancial Instruments
Module codeBEAM031
Academic year2023/4
Module staff

Professor Xiao Ye (Lecturer)

Duration: Term123
Duration: Weeks


Number students taking module (anticipated)


Module description

Financial Instruments provides an in-depth coverage of different types of financial instruments and their valuation. These instruments include equities, bonds, derivatives and alternative financial investments such as mutual funds, hedge funds, exchange traded funds and hard commodities.


The content of this module is relevant across countries as it focuses on general theories, models and concepts that are applicable universally. Some aspects of the course looks at development in developed and emerging markets.


In this module, students develop problem-solving, numerical, analytical, and discursive skills, as well as acquiring knowledge and understanding of financial markets and related concepts. 

Module aims - intentions of the module

This module aims to provide students with a comprehensive overview from the perspective of a fund manager of valuation techniques for equity, bond and derivative instruments. Apart from these financial instruments, the module aims to provide a good understanding of various professionally managed funds and their investment. The module also aims to provide, where appropriate, students with an appreciation and application of empirical research literature on issues relating to various financial instruments, portfolio strategies and in the fund management area. The module takes existing instruments and organised markets as its starting point and aims to develop both a scholarly knowledge of contracts and a critical ability to judge the appropriate use of each instrument type within a portfolio context. An important aim is to understand the intuition and the logic behind many of the models.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

  • 1. demonstrate knowledge of the key characteristics of the main categories of financial instruments
  • 2. demonstrate an understanding of the investment objectives and constraints of the clients of fund managers and how investment instruments and approaches can be chosen and tailored to client needs
  • 3. use various approaches to the valuation of traded equity, bond and derivative instruments
  • 4. critically appraise the operation of various financial markets and the specifications of the instruments traded
  • 5. demonstrate knowledge of a wide variety of other investment vehicles and to evaluate critically their usefulness to both suppliers and demanders of financial instruments

ILO: Discipline-specific skills

On successfully completing the module you will be able to...

  • 6. collect and interpret financial data in the light of established theories
  • 7. access a wide body of empirical research literature, critically appraise the literature and demonstrate its application
  • 8. collect and interpret financial data and problems in the light of established theories
  • 9. access a wide body of empirical research literature and critically appraise it
  • 10. use relevant databases, existing research literature and techniques to create a portfolio

ILO: Personal and key skills

On successfully completing the module you will be able to...

  • 11. plan and manage his/her own study
  • 12. make appropriate use of learning resources, including datasets
  • 13. analyse critically problems arising in both academic and practical contexts

Syllabus plan

Whilst the module’s precise content may vary from year to year, it is envisaged that the syllabus will cover some or all of the following topics:


  • Overview of common financial instruments and their financial markets.
  • Equity instruments and markets; approaches to common stock valuation: discounted cash flow applications, and relative valuation techniques.
  • Fixed income instruments: overview of various types of fixed income securities, valuation of fixed income securities, bonds with embedded options, understanding bond ratings, the risks associated with investing in bonds, understanding yield spreads, interpreting the yield curve, spot rates and forward rates, interest rate risk and bond portfolio management strategies.
  • Derivatives instruments; futures and forwards, option payoffs, option valuation, .
  • Alternative Investments; hedge funds, mutual funds, ETFs, private equity, real estate, hard commodities and art.

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Scheduled Learning and Teaching Activity30Lectures and Tutorials
Guided Independent Study120Independent study

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Weekly tutorials consisting of numerical and discussion questionsWeekly 1 hour tutorials throughout the term 1-13Correct solutions and suggested answers.
Creation of an Investor Policy Statement and portfolioThis will be developed throughout the module1-13Suggested answers

Summative assessment (% of credit)

CourseworkWritten examsPractical exams

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Written Test501 hour1, 4, 5-11Cohort wide general feedback and a sample of correct solutions
Coursework502000 words1-13Individual feedback and cohort wide general feedback

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Written test (50%)1 hour test1, 4, 5-11Aug/Sep
Coursework (50%)Re-submission (2,000 words) (50%)1-13Aug/Sep

Re-assessment notes

Deferral – if you have been deferred for any assessment you will be expected to resubmit 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 required to sit a further examination. The mark given for a re-assessment taken as a result of referral will count for 100% of the final mark and will be capped at 40%.

Indicative learning resources - Basic reading

• Reilly, F.K. and Brown, K. (2009) Analysis of Investments and Portfolio Management, 9th edition, UK: South-Western.
• Supplementary reading: Assigned research papers and Articles (these will be made available through ELE)

Credit value15
Module ECTS


Module pre-requisites


Module co-requisites


NQF level (module)


Available as distance learning?


Origin date


Last revision date