UNIVERSITY OF KENT
SECTION 1: MODULE SPECIFICATIONS
1. Title of the module
Financial Economics: Capital Market Instruments (EC822)
2. School or partner institution which will be responsible for management of the module
Economics
3. Start date of the module
September 2006
4. The number of students expected to take the module
5-15
5.
Modules to be withdrawn on the introduction of this proposed module and consultation with other
relevant Schools and Faculties regarding the withdrawal
None
6. The level of the module (e.g. Certificate [C], Intermediate [I], Honours [H] or Postgraduate [M])
Level M (FHEQ Level: 7)
7. The number of credits and the ECTS value which the module represents
15 (7.5 ECTS)
8. Which term(s) the module is to be taught in (or other teaching pattern)
Autumn
9. Prerequisite and co-requisite modules
None
10. The programmes of study to which the module contributes
MSc in Economics and Finance – compulsory
MSc in Finance and Econometrics - compulsory
MSc in Economics - optional
MSc in Economics and Econometrics - optional
11. The intended subject specific learning outcomes
The module aims:

to develop students’ analytical understanding of financial markets and instruments

to ensure students understand basic financial concepts and characteristics of different asset
types

to develop students’ abilities to calculate key financial measures and understand the principles
underlying optimal investment strategies

to develop students’ practical knowledge and understanding of financial markets and instruments
On successful completion of the module, students will:

have improved their analytical skills in using mathematics to analyse finance markets
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
have developed the ability to solve financial problems and present their solutions orally and in
written form

have improved their ability to relate intuitive and mathematical explanations of financial analysis

understand the different methods of risk control and valuation of different financial assets

understand and be able to use the concepts of discounting, diversification and Capital Asset
Pricing Model, Asset/Liability Management, arbitrage and hedging and understand the different
types of asset class

have improved their internet literacy in collecting and processing information from the internet
and other sources
The economic analysis of financial markets and instrument is the starting point of financial
economics. This module contributes substantially to the subject skills acquired in the Economics
and Finance MSc and as an option contributes to the other MSc programmes, specifically:
Economics and Finance MSc – A1-10; C1-10
Finance and Econometrics MSc – A1-5, A8-9; C1-8
Economics MSc – A1-5,8-10; C1-8
Economics and Econometrics MSc – A1-5,8-10; C1-8
12. The intended generic learning outcomes
The module will develop and reinforce student’s generic and transferable skills in a number of
different areas. In particular, students successfully completing this module will have:

developed analytical skills through the use of practical mathematics to analyse financial markets

developed their logical thinking skills through relating intuitive explanations of financial markets
and instruments to mathematical analysis

become more independent in the use of their problem solving abilities

improved their internet literacy through searching the internet and other sources for financial
information

improved their oral and written ability to present logical solutions to financial problems set in
exams and assignments
This module contributes to most of the intellectual and transferable skills of the Economics and
Finance MSc and as an option contributes to other MSc programmes, specifically:
Economics and Finance MSc – B1-6; D1-11
Finance and Econometrics MSc – B1-5; D1-9
Economics MSc – B1-6; D1-9
Economics and Econometrics MSc – B1-6; D1-9
13. A synopsis of the curriculum
The module curriculum emphasises analytical training and considers the topics: discounting;
present valuation; diversification; risk; CAPM; arbitrage; hedging; properties of different asset
classes ( eg bonds, equities, foreign exchange, etc.); risk control; Asset/Liability Management;
optimal investment strategies under different circumstances; and analytical calculation of key
financial measures. Though taking an analytical approach the module provides practical
knowledge and methods. It provides a sound base of knowledge for Financial Economics
andAsset Pricing.
14. Indicative Reading List
Introductory reading
Peter l Bernstein, (1996) Against the Gods – the Remarkable Story of Risk, John Wiley.
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Jagjit Chadha, “The Financial Crisis: What have macroeconomists learnt?” available at
http://econpapers.repec.org/paper/ukcukcedp/1012.htm
Main course book
Roy E Bailey, (2005) The Economics and Financial Markets, Cambridge University Press.
Background additional reading
Frank K. Reilly and Keith C. Brown (2005) Investment Analysis and Portfolio Management, 7th
ed., Dryden Press.
John C. Hull (2006) Options, Futures, and Other Derivatives, 6th ed., Prentice Hall.
15. Learning and Teaching Methods, including the nature and number of contact hours and the total
study hours which will be expected of students, and how these relate to achievement of the intended
module learning outcomes
The module is taught by means of 10 one-hour lectures and problems classes that follow the
lectures. The lectures introduce the module material and provide an overview of the knowledge,
principles and techniques. At the end of each section of the module, students solve problem sets
in advance of the classes. In the classes, students present their solutions and discuss problems
that they may have with the analytical material and calculations. The nature of the module
material is that is technical and the problems considered have objective technical correct
answers. Help is provided in the problem sessions and the textbooks in this area have many
example questions and worked solutions. All MSc students take an intensive maths course at the
beginning of the academic year and help is provided for those students requiring support.
16. Assessment methods and how these relate to testing achievement of the intended module learning
outcomes
The final mark for this module is based on the final 2 hour exam (80%) and one short essay
(20%). The exam is composed of two parts, the first part of the exam (worth 40 out of 100 exam
marks) contains eight questions out of which four must be answered with written responses. The
second part (60 out of 100) asks four analytical questions two of which must be answered. The
formats of the exam question are the same as those of the exercises considered in the problem
classes. The short questions test the range of the students’ understanding and knowledge, but
require brief and clear statements. The long questions ask students to derive key analytical
results and calculate some numbers, as well as to provide brief intuitions and related diagrams.
The exam is designed to allow students to prove their understanding of concepts and analytical
skills. It tests and develops all of the non-oral and non-internet outcomes considered in sections
11 and 12.
The short essay (of 2000 words) gives the opportunity for students to demonstrate their ability to
search, use and synthesise data. This assessment test and develops all of the non-oral
outcomes considered in sections 11 and 12.
17. Implications for learning resources, including staff, library, IT and space
There are no implications for Library resources.
The existing IT environment is good and more than sufficient for the needs of this module
Timetabling issues are not major and have been discussed with the Timetabling Office.
18. The School recognises and has embedded the expectations of current disability equality legislation,
and supports students with a declared disability or special educational need in its teaching. Within
this module we will make reasonable adjustments wherever necessary, including additional or
substitute materials, teaching modes or assessment methods for students who have declared and
discussed their learning support needs. Arrangements for students with declared disabilities will be
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made on an individual basis, in consultation with the University’s disability/dyslexia support service,
and specialist support will be provided where needed.
19. Campus where module will be delivered:
Canterbury
If the module is part of a programme in a Partner College or Validated Institution, please complete
the following:
20. Partner College/Validated Institution: Not Applicable
21. University School responsible for the programme: Not Applicable
SECTION 2: MODULE IS PART OF A PROGRAMME OF STUDY IN A UNIVERSITY SCHOOL
Statement by the School Director of Learning and Teaching/School Director of Graduate Studies
(as appropriate): "I confirm I have been consulted on the above module proposal and have given advice
on the correct procedures and required content of module proposals"
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Director of Learning and Teaching/Director of
Graduate Studies (delete as applicable)
Date
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Print Name
Statement by the Head of School: "I confirm that the School has approved the introduction of the
module and, where the module is proposed by School staff, will be responsible for its resourcing"
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Head of School
Date
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Print Name
SECTION 3: MODULE IS PART OF A PROGRAMME IN A PARTNER COLLEGE OR VALIDATED
INSTITUTION
(Where the module is proposed by a Partner College/Validated Institution)
Statement by the Nominated Officer of the College/Validated Institution (delete as applicable): "I
confirm that the College/Validated Institution (delete as applicable) has approved the introduction of the
module and will be responsible for its resourcing"
.................................................................
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Nominated Responsible Officer of Partner
College/Validated Institution
Date
………………………………………………….
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Print Name
…………………………………………………..
Post
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Partner College/Validated Institution
Module Specification Template
Last updated January 2013
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