Module

Financial Instruments

Module description

Summary:

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 and exchange traded funds.

Additional Information:

Internationalisation:

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.

Employability:

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. 

Sustainability:

All of the lecture materials are available on the ELE (Exeter Learning Environment).

Full module specification

Module title:Financial Instruments
Module code:BEAM031
Module level:M
Academic year:2020/1
Module lecturers:
  • Ms Claire Lavers - Convenor
Module credit:15
ECTS value:

7.5

Pre-requisites:

None

Co-requisites:

None

Duration of module: Duration (weeks) - term 1:

9

Module aims

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. The module aims to give students insights into practical aspects of fund management. The module also aims to provide, where appropriate, students with an appreciation of the considerable 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 not only a scholarly knowledge of contracts but also 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

ILO: Module-specific skills

  • 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 selectively 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 instruments traded
  • 5. demonstrate knowledge of a wide variety of other investment vehicles as to evaluate critically and comparatively their usefulness to both suppliers and demanders of financial instruments

ILO: Discipline-specific skills

  • 6. develop rigorous theoretical arguments based on mathematical and analytical reasoning
  • 7. rigorously analyse problems in finance
  • 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 conduct a detailed investigation of problems arising in financial markets and models

ILO: Personal and key skills

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

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

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad
181320

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Scheduled Learning and Teaching Activity18Lectures and Tutorials
Guided Independent Study132Reading, preparation for classes and assessments

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 StatementThis will be developed through the first weeks of the module2, 5, 10, 12Suggested answers

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
50500

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Written Test501 hour1, 3-11Correct solutions and suggested answers.
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 Exam (50%)Written test (1 hours) (50%)1, 3-11Aug/Sep
Coursework (50%)Re-submission (2,000 words) (50%)1-13Aug/Sep

Syllabus plan

  1. Overview of common financial instruments and their financial markets.
  2. Equity instruments and markets; approaches to common stock valuation: discounted cash flow applications, relative valuation techniques, and equity risk premium.
  3. 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, measurement of interest rate risk, bond portfolio management strategies.
  4. Derivatives instruments; futures and forwards, option payoffs and options strategies, option valuation techniques, hedging techniques, understanding debt and equity as options.
  5. Alternative Investments; hedge funds, mutual funds, Fund of Funds, ETFs, private equity, real estate, commodities and art.

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 though the ELE)

Module has an active ELE page?

Yes

Origin date

17/07/2014

Last revision date

16/09/2020