Financial Markets and Decisions 2
| Module title | Financial Markets and Decisions 2 |
|---|---|
| Module code | BEE3034 |
| Academic year | 2020/1 |
| Credits | 15 |
| Module staff | Dr Rish Singhania () |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 11 |
| Number students taking module (anticipated) | 100 |
|---|
Module description
Summary:
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. The topics covered include expected utility theory, adverse selection, moral hazard, Modigliani-Miller theorems and the incentive effects of debt and equity.
Internationalisation
The module content is globally relevant as it theoretically discusses financial markets, international trends in corporate finance and governance, and comparative studies through up-to-date research.
Employability
Students 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
The module presents the theory of decision-making under risk and the economics of information and to discuss applications of the theory in the areas of banking and financial markets. The topics covered include expected utility theory, adverse selection, moral hazard, the Modigliani-Miller theorems and the incentive effects of debt and equity.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. understand key concepts of decision-making under uncertainty, the impact of uncertainty on firms and impact on financial markets.
- 2. understand the choice between debt and equity financing. How financial decisions are affected by asymmetric information.
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 3. understand the causes and consequences of moral hazard and adverse selection in financial markets.
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 4. think analytically about financial markets and firms. Formal modelling of decisions and financial markets.
- 5. study a range of teaching and research material and to work independently.
Syllabus plan
- Risk and the Cost of Capital – WACC (BMA, Chapter 9)
- Agency Problems (BMA, Chapters 10 to 12)
- Capital Structure – Modigliani and Miller Theorem (BMA, Chapters 16 to 19)
- Mergers, Corporate Control, and Governance (BMA, Chapters 31 to 33)
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 20 | 130 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Scheduled Learning and Teaching Activity | 20 | Lectures |
| Guided Independent Study | 130 | Reading, research and reflection. Preparation for exam and midterm. |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| A problem set for each topic and a revision sheet after all topics are completed. | 1 | 1-5 | 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 |
|---|---|---|
| 20 | 80 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| Examination | 80 | 2 hours | 1-5 | Notes on solutions and guidance on ELE |
| Midterm | 20 | 50 minutes | 1-5 | Written |
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 |
|---|---|---|---|
| Examination and Midterm | Examination (100%) 2 hours | 1-5 | August/September Reassessment Period |
Indicative learning resources - Basic reading
Brealey, Myers, and Allen (2014). Principles of Corporate Finance, McGraw Hill, 11th Global Edition
| Credit value | 15 |
|---|---|
| Module ECTS | 7.5 |
| Module pre-requisites | BEE2027 |
| Module co-requisites | None |
| NQF level (module) | 6 |
| Available as distance learning? | No |
| Origin date | 01/09/2007 |
| Last revision date | 05/08/2020 |
