NUI, GALWAY J.E CAIRNES SCHOOL OF BUSINESS & ECONOMICS
EC247 INTRODUCTION TO FINANCIAL ECONOMICS
Semester 2 2012/13
Cian Twomey
Lecturer:
Office: Room 204, First floor, St. Anthony’s
Phone: 493121
Email: cian.twomey@nuigalway.ie
Office Hours: By appointment
Lecture hours:
Monday 4 - 5pm AM150 O’Tnuthail theatre, Arts Millennium
Tuesday 4 - 5pm AC201 Concourse
Excel Laboratory Sessions:
To supplement the lectures, there will be a series of laboratory sessions. Your tutor
will deal with all of the relevant Excel formulas and functions and also cover
applications of the material covered in lectures. Dates and times are to be confirmed.
Course Outline
No.
Topics
1
Introduction to Financial Markets & Excel
Functions
- principles of finance
- getting started in Excel with graphs and charts
2
Key Concepts: Time Value of Money & NPV
- future value, present value
- net present value and internal rate of return
3
Risk & Portfolio Statistics
- understanding risk in financial assets
- basic statistics for asset returns
- using Excel to evaluate portfolio risks
- portfolio returns and the efficient frontier
4
Valuing Shares & Bonds
- valuation tools & discount rates
- yields and bond prices
- Gordon Growth model
- comparing valuation methods for shares
5
Introduction to Financial Options
- how financial options operate
- basic option pricing facts
Benninga
1, 24, 25, 26, 27, 28,
29
2, 4, 5
8, 9, 10, 11, 12, 13,
6, 7, 13, 14, 15, 16
20, 21
Learning Outcomes
This is quite a practical module for those interested in doing further modules in
financial economics and those interested in other disciplines (notably accounting)
who wish to develop a useful transferable skill, namely the most important
professional tool in financial services (Excel). You will find that the computations
will not only enable you to get answers to important financial economics problems,
but will deepen your understanding of the concepts involved.
By the end of this module, you should be able to:
i)
Explain the key principles of financial economics
ii)
Use a spreadsheet to solve problems in financial economics
iii)
Access and use financial data to real-world issues
iv)
Apply basic statistical techniques to financial economics
v)
Describe the properties of the key financial assets
vi)
Build your own spreadsheet models for future courses in finance
Required Text
Benninga, S. (2011). Principles of Finance with Excel 2nd edition, Oxford University
Press. http://finance.wharton.upenn.edu/~benninga/
This text is absolutely essential to have as it will be used exclusively for in-class
theoretical and Excel examples. While other textbooks do cover the financial
concepts and ideas, the Benninga textbook incorporates Excel throughout.
Other Texts
Any introductory financial economics text will be useful as a supplementary
resource on the theoretical aspects of the course, e.g. Holden, C. (2008). Excel
Modeling and Estimation, Pearson; Benninga, S. (2008). Financial Modeling, MIT.
Assessment
1) Excel-based stock market project (40%)
- Using relevant stock market data, this project will facilitate learning Excel
and its applicability to financial economics (details to follow)
2) Final 2-hour written exam (60%)
- A written paper covering all aspects of the course.
Blackboard
I will use Blackboard to disseminate all relevant course-related information (notes,
readings, assignments, project, relevant examples etc.).
When lecture notes are made available on Blackboard beforehand, an email will be
sent to all of you. It is then up to you to print off a copy and bring it to class.
HOWEVER, THE LECTURE NOTES ON BLACKBOARD WILL NOT COVER INCLASS EXCEL EXAMPLES & COMMANDS, NUMERICAL QUESTIONS.
Therefore, it would be extremely difficult to get an honours grade in this module
without attending lectures.