module specification

AC5063 - Principles of Finance (2021/22)

Module specification Module approved to run in 2021/22
Module title Principles of Finance
Module level Intermediate (05)
Credit rating for module 15
School Guildhall School of Business and Law
Total study hours 150
 
9 hours Assessment Preparation / Delivery
105 hours Guided independent study
36 hours Scheduled learning & teaching activities
Assessment components
Type Weighting Qualifying mark Description
Coursework 40%   Essay - 1000 words
Unseen Examination 60%   2-hour unseen exam.
Running in 2021/22
Period Campus Day Time Module Leader
Autumn semester North Tuesday Morning
Autumn semester North Tuesday Afternoon

Module summary

The module is designed to introduce students to the basic theory of finance and to apply the theory to the selection and management of financial and investments portfolio. The module will help students to understand theories of finance to develop the skills of valuing investments and critically evaluate the frameworks for pricing securities, risks and reward relationship.

Furthermore, you will be introduced to various aspects of finance such as financial markets, instruments, concepts, and the institutional arrangements relating to the issuances and trading of various capital market securities.

This core module aims to enable students to:

1)   understand the basic theory of finance and develop the skills of valuing investment
      instruments;

2)   critically evaluate the conceptual frameworks for pricing securities;

3)   undertake a written critical review of contemporary theories in finance. 

4)   calculate risk and return and establish the relationship between risk and return.

5)   recognise the investment environment and for making investment decisions.


The module also aims to help students in the development of the following skills:

.     academic writing;
.    researching
.    critical review of empirical data
.    analysis of economic financial data;
.    problem solving skills and decision making
.    quantitative problem-solving and decision-making;
.    self-assessment and reflection.

Syllabus

The Financial System  LO1
Function and structure of financial markets, internationalization of financial markets, function and types of financial intermediaries, financial regulation of the financial system, the efficient market hypothesis, financial crises together with fiscal, monetary, interest rate policies for macroeconomic stability.

The Efficiency of Financial Markets  LO2
     The difference between operational efficiency and market
     Efficiency.
     The differences between weak, semi-strong and strong
     forms of market efficiency and their practical implications share
     valuation and effect on investors decision making.

Pricing of Financial Securities  LO3
     Fixed income securities: treasury and corporate bonds;
     bond pricing; duration and term structure of interest rates.
     The equity market: primary and secondary issues; basic
     share pricing models.
     Portfolio theory: risk and return; Markowitz’ portfolio theory
     and the capital assets pricing model (CAPM).

Balance of independent study and scheduled teaching activity

Teaching will take the form of a 2-hour lecture and a 1-hour seminar sessions.

The lecture will be used to introduce basic finance concepts and techniques. The seminar sessions will concentrate on problem solving exercises and interpretive skills. Questions will be pre-distributed to allow students to attempt answers in advance of the seminar. Small group of students will attend seminar sessions which provides enough space and time to ensure learning is taking place. Students will be encouraged to engage in the lessons to solve seminar questions themselves with a minimum level of guidance from the lecturer. This will help them to develop independent learning at the intermediate level of their learning progress.

The learning and teaching materials will be available ahead of the lecture and seminar sessions on VLE so students can read and attempt to solve the questions before coming to the class. At the end of each seminar sessions students will have some questions to work on and reflect their learning in the next lesson.

Learning outcomes

On successful completion of this module, students will be able to:

LO1. Describe the nature, structures, and functions of different financial markets and their 
         interconnectedness.

LO2. Analyse and do literature review on empirical evidence on efficient markets and 
         assess the risk and return relationships in portfolio management.

LO3. Examine the theoretical models for determining the fair value of different types of
         securities and advise on selection of portfolio for institutional and individual 
         investors.

Assessment strategy

Students will complete two kinds of assignment:

• Some assignments will contribute to overall mark and grades – summative assessment.
• Some assignments will not contribute to overall mark and grades but will be important to help students progress in understanding of the subject – formative assessment.

Formal Assessment will comprise individual coursework (40%) and written examination (60%).

The individual coursework will require an independent review of research literature in the form of an essay.

The written examination will be a 2-hour closed book assessment.  The examination questions will have a focus on specific sections of the syllabus but may cover more than one topic.

Bibliography

Core Textbooks:
Pilbeam K, Finance and Financial Markets, 4rd edition, 2018, published by Palgrave Macmillan, ISBN-13: 9781137515629

Other Recommended Reading:
Brealey, R, Myers, S & Allen, F, Principles of Corporate Finance, 12th edition, 2017, published by McGraw Hill, ISBN-13: 9781259144387

Elton, E, Gruber M, Brown S and Goetzmann W, Modern Portfolio Theory and Investment Analysis, 9th edition, 2014, published by John Wiley, ISBN-13: 9781118469941

Bailey R, The Economics of Financial Markets, 1st edition, 2005, published by Cambridge University Press, ISBN-13: 9780521848275

Journals: 
Library Journal Databases :  Academic Search Complete, Business Source Ultimate, Emerald Management, Science Direct

Websites:
Financial Reporting Council                  www.frc.org.uk
ICAEW                                                  www.icaew.com
ACCA                                                    www.accaglobal.com
ICAEW online journal                            www.accountancymagazine.com
Accountancy Age                                  www.accountanyage.com
Financial Times                                     www.ft.com

Electronic Databases:  FAME