EC4617
Financial Economics: Asset Pricing
LECTURER:
Dr Leonidas Barbopoulos
Martinmas (First) Semester 2015/16
CREDITS:
15
LECTURES:
18 lectures + 1-hour class test.
2 x 1 hour lectures per week (9 weeks).
Timing of lectures and venue: TBA.
TUTORIALS:
4 x 1 hour tutorials likely to take place in weeks
3, 5, 7 and 9. (To be confirmed).
EXAMINATION:
A two-hour examination.
Structure: TBA.
CONTINUOUS ASSESSMENT:
1 x 50 minutes Class Test; date TBA.
1 x 1500 words project, to be submitted by TBA.
FINAL GRADE:
Examination 60% weight
Class Test 20% weight
Project 20% weight
ATTENDANCE REQUIREMENTS: you must sit
the examination and attend a minimum of 4
tutorials to gain credit for this class.
Brief Module Outline
The main aim of this module is to provide a rigorous grounding in the theory and applications of
finance; in addition this module is to provide a thorough synthesis of the most important current
research in finance, with a particular emphasis on the applications of the principles. The ultimate
aim is to provide students with a standard approach to define, measure, as well as predict the value
of financial claims in a world of uncertainty. The standard notion of risk versus return is defined and
analytical economic models of how risks and returns are determined and traded in financial
markets. Both normative and positive aspects of financial theory will be investigated, together with
supporting descriptive and empirical evidence.
Learning Outcomes
It is intended that by the end of the course, students will:





Advanced knowledge and critical understanding of essential components of modern
finance theory and associated current research.
Explored, understood and appreciated the complexity and contradictions of the current
academic literature and its implications for professional practice.
Demonstrated ability to learn and work independently in finance, exercising critical
judgment and discrimination in the resolution of complex problematic situations.
Used highly specialized and advanced technical, professional, and academic skills in the
analysis of relevant specific problems in finance.
Had the opportunity to apply your problem solving and analytical skills to issues in finance
in a complex specialized context.
Course Outline
1.
2.
3.
4.
5.
6.
7.
8.
The Role of Financial Theory and its Building Blocks
Capital Markets, Consumption and Investment
Capital Budgeting, Investment Decisions, and Valuation Theories
The Theory of Choice under Uncertainty
Portfolio Theory
Equilibrium Asset Pricing Models I: CAPM and its recent developments
Capital Market Efficiency, Market Anomalies and Behavioral Finance
Introduction and Applications of Derivatives Instruments
Main Reading
The main textbook for this course is:
Principles of Corporate Finance; 11th Global Edition, McGraw-Hill. Brealey Richard, Myers
Steward, and Allen Franklin.
More supporting/reading materials will be added at the end of each topic/lecture.
1