Form C4
Heriot-Watt University - Course Descriptor
1. Course
Code
C31FM
2. Course
Title
Financial Markets
3. SCQF
Level
5. School
School of Management and Languages
7. Delivery:
Location &
Semester
Edin
SBC
Orkney
Dubai
IDL
Collaborative Partner
Approved Learning Partner
Sem…1..
Sem…….
Sem………
..
Sem…….
.
Sem….
Name…………………….....Sem..…...
Name …………………………………Sem………..
6. Course
Co-ordinator
11
4. Credits
15
Bing Xu
8. Pre-requisites
None
9. Linked Courses
(specify if synoptic)
10. Excluded Courses
11. Replacement Courses
None
None
Code:
12. Degrees for which
this is a core course
Date Of Replacement:
13. The course may be
delivered to:
UG only
PG only
UG & PG
MSc Financial Mathematics
MSc Quantitative Financial Risk Management
14. Available as an Elective?
Yes
No
15. Aims
To introduce students to the way financial markets and institutions function in practice, with particular emphasis on equities and bonds. This will provide the context of
underlying finance theory into which the mathematics will fit.
16. Syllabus
I. Introduction to Financial Markets
Introduction, purpose of financial markets, the Stock Exchange, types of investments.
Institutional investors: pension funds, life funds, general insurance funds, mutual funds.
Interest rate calculations: compound interest, annuities, real and nominal interest rates, spot and forward rates, discounted cash flow.
Equities: fundamental analysis and technical analysis, portfolio management.
Portfolio theory: Markowitz model, international diversification; basics of CAPM and Arbitrage Pricing Theory.
Efficient markets: informational efficiency, behavioural finance.
Market indices: equity indices, bond indices, property indices.
Portfolio performance measurement: rates of return, notional funds, consideration of risk.
II. Bond Markets
Overview of fixed-income securities.
Bond mathematics including bond prices, interest rates and yields.
The concepts of duration and convexity, and their use in portfolio management.
The term structure of interest rates and alternative theories, and empirical evidence.
Index-linked securities.
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Form C4
Heriot-Watt University - Course Descriptor
17. Learning Outcomes (HWU Core Skills: Employability and Professional Career Readiness)
Subject Mastery
Understanding, Knowledge and Cognitive
Skills
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

Personal Abilities
Scholarship, Enquiry and Research (Research-Informed Learning)
know the principles of the valuation of shares and bonds;
be able to apply certain analytical techniques regarding shares and bonds;
understand the sources of bond risk and the factors affecting bond prices.
have the ability to critically evaluate the performance of an equity fund manager.
Industrial, Commercial & Professional Practice







Autonomy, Accountability & Working with Others
Communication, Numeracy & ICT
understand the context within which market professionals work;
have some familiarity with the main financial markets and instruments trades;
have some familiarity with the investment industry;
understand the role of the various institutions involved in financial markets;
be able to write a coherent essay in a way which demonstrates that they have understood the material
demonstrate the ability to learn independently
manage time, work to deadlines and prioritise workloads
18. Assessment Methods
Method
19. Re-assessment Methods
Duration of Exam
Weighting (%)
Synoptic courses?
Method
(if applicable)
Examination
Coursework
2 hours
Duration of Exam
Diet(s)
(if applicable)
80%
20%
Examination
2 hours
20. Date and Version
Date of Proposal
March 2013
Date of Approval by
School Committee
Date of
Implementation
September 2013
Version
Number
2/2
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