Centre for Financial
& Management Studies (CeFiMS) - University of London
Postgraduate
MSc Financial Management
Seven courses from the following:
Managerial
economics [C218]
Quantitative
methods for financial management [C219]
Corporate
finance [C221]
Macroeconomic
policy and financial markets [C225]
Bank
financial management [C222]
Risk management: principles and applications [C223]
Investment
and project appraisal [C227]
The
Japanese financial system [C224]
Banking
and capital markets [C226]
Finance in the global market [C242]
The International
Monetary Fund and Economic Policy [213]
Dissertation*
[C228]
*
The topic for the dissertation must be approved by the
Programme Director.
Detailed Syllabus
Managerial economics [C218]
The main aim of this course is to present the main ideas and
analytical tools in microeconomics and managerial economics. These
ideas and tools are essential for a sound understanding of financial
management. The course starts by discussing the methods of
microeconomic analysis and of managerial economics and their relevance
for financial economics and management. The theory of the consumer and
the theory of the firm are then explored in detail. After examining
the behaviour of individual firms, the course looks at the
interactions among firms by analysing various types of market
equilibrium: perfect competition, monopoly and oligopoly. The analysis
of oligopoly is carried out by making use of game-theoretic tools to
model the strategic interactions among the competing firms. The course
then presents some modern developments in managerial economics, which
are based on the idea that firms and agents have only an imperfect
knowledge of their competitors or of other agents. They must therefore
behave or design contracts (e.g. wage contracts or financial
contracts) in such a way that their own welfare is maximised, despite
them being unable to observe perfectly the behaviour of the other
partners in the contract (e.g. workers or managers of firms). Finally,
the course looks at the classical and modern theories of investment
and finance, and applies these theories to financial decisions and to
corporate control issues.
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Quantitative methods for financial management
[C219]
This course introduces some of the quantitative methods of
financial management which are commonly used by financial analysts,
firms’ managers and individual investors. It examines techniques for
the valuation of different classes of securities, analyses criteria
for guiding investment decisions, considers the measurement of asset
risk and return and discusses statistical techniques of forecasting.
The MICROFIT computer package is provided for regression analysis and
diagnostic procedures. The aim of the course is to give students
confidence and skill in the use of the mathematical and statistical
methods used in the analysis of financial instruments and financial
markets, including the calculation of financial market yields and
prices, frequency distributions, risk and probability, correlation and
regression analysis. Statistical inference, the multiple linear
regression model, autocorrelation, and risk reassessment and
investment are all topics covered in the course, which teaches not
only the relevant theoretical concepts but, in the belief that
quantitative techniques can only be learned by doing, gives abundant
practice in the manipulation of numerical material with problems and
exercises.
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Corporate
finance [C221]
The theories, examples, and empirical studies in Corporate
finance which are discussed in this course concentrate on the finance
of corporations whose shares are traded on a well organised stock
market. The purpose of the course is to explain the observable
financial decisions of corporations and portfolio managers, and to
interpret the behaviour of the securities markets which results from
the decisions of those and other agents. Traditionally, the securities
markets considered in corporate finance are ‘spot’ or ‘cash’ stock
markets dealing in company shares and bonds. But modern finance also
includes large and growing markets in ‘derivatives’, especially
options and futures, which are contracts relating to the future prices
of the underlying shares or bonds. To ‘explain the behaviour’ of any
of the financial markets involves explaining how the prices of shares,
bonds and derivatives are determined. The course aims to enable
students to understand and analyse the theoretical principles relating
to corporate finance, and the controversies and criticisms which
surround these theoretical propositions. It focuses on the relation
between corporations’ decisions on investing in productive
(‘physical’) assets and issuing financial liabilities, and the markets
in the financial liabilities (equities and debt) which they issue. The
theorems concerned with corporations’ decision problems which the
course examines include the Net Present Value Rule, the
Modigliani-Miller Theorem on Dividend Policy and their earlier seminal
Theorem on Debt-Equity Ratios, and Agency Theory; and the main
theorems focusing on the Operation of Financial Markets analysed are
the Efficient Markets Hypothesis, the Capital Asset Pricing Model, and
the Theory of Option Pricing.
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Bank financial management [C222]
This course has a somewhat more practical orientation than
many other courses in the MSc programme, focusing as it does on the
microeconomic problems of financial management of banking firms. This
does not mean, however, that the course is devoid of theoretical
interest. It also raises some new theoretical problems for
consideration, many of them concerned with the way we need to
conceptualise the banking firm. This course examines the role and
importance of bank financial management to the modern bank. It teaches
the basic models of financial management taught by University
Economics Departments and Business Schools, which were constructed
from the experience of mature capitalist economies. The course
discusses the various trends shaping banking markets, such as
institutionalisation, securitisation, globalisation and concentration.
Among its aims are the following: to set the banking firm in the
context of a changing financial services industry; to look at the role
of the financial manager within the banking firm; to examine bank
capital and capital structure, and to consider the question of the
adequate regulation of the banking sector to ensure its safety, to
preserve bank liquidity and prevent bank failures.
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Risk
management: principles and applications [C223]
Portfolio optimization: risk and return in securities markets.
Principles of arbitrage and hedging. Hedging with options and futures.
Pricing of options contracts and futures. Warrants, convertibles and
swaps. Risk management using options and futures. Real options.
Managing market risk. VAR techniques. Credit risk: credit ratings,
creditmetrics.
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The
Japanese financial system [0FM0207]
The financial system of Japan, particularly its banking sector, has
frequently been in the news over the years since 1990 when Japan’s
asset-price ‘bubble’ burst and the economy entered a period of
stagnation. Until early 2004, the banking sector had mostly been in
the news for the wrong reasons: bad loans, ban failures, low
profitability, defensive mergers. Even then, academics were exploring
key questions about the changes underway in Japanese finance and about
the relation between the problems in the financial sector and the real
economy. Those questions, such as the financing of investment across
different sectors of the economy and firms of varying size, continue
to be investigated as the economy and the financial sector appear to
be showing definite signs of recovery. And in addition to its
importance for Japan’s economy – the second largest in the world –
Japan’s financial system is an important illustration of transition
from an archetypal bank-based one into a system in which capital
markets play an increasingly important role. This course explores some
of the implications of that transition, which has relevance beyond
Japan itself.
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Macroeconomic policy and financial markets
[FME0101]
Macroeconomic policy and financial markets focuses on the
relationship between macroeconomic policies and financial markets. How
do central banks’ policies on interest rates and credit relate to
financial markets? What is the relation between budget deficits and
financial markets? How do financial markets relate to investment and
savings flows? The course includes both theory and empirical material.
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Banking and capital markets
[FME0103]
This course covers the role of banking and finance in the
economy. It introduces some of the central issues and ideas in modern
theories of banking and finance in the light of recent thinking about
the relationship between banking, finance and the real economy. In
this course, finance is examined within a general framework
concentrating on the experience of advanced capitalist economies,
including an introduction to the current concern with derivatives. As
a contrast, applications to less developed economies are also,
briefly, considered. The course is organised around four principal
themes: the relationship between financial markets, financial
institutions, and the economy’s real investment and savings; the
trade-off between risk and expected returns and their links to
information and monitoring; the efficiency of financial markets; and
the dialectic between regulation and deregulation or liberalisation of
financial markets.
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Investment and project appraisal
[FME0205]
This course is concerned with the methodologies used in the
selection and appraisal of investment decisions in private and public
sectors. Two main themes are addressed: what is needed from the micro,
corporate sector, point of view in order to analyse, assess and gauge
investment activities, and how cost-benefit analysis can be applied to
public sector investment projects. The course aims to introduce the
main theoretical and practical issues involved in the appraisal and
assessment of investment projects. The first part of the course covers
private and public sector investment evaluation in developed countries
(projects such as waterworks, irrigation, transport, communication,
health, education, etc.). In the latter half, the focus is on the
growth of development projects in less developed countries and
addresses issues relating to shadow pricing, environmental projects
and a more theoretical analysis of cost-benefit and appraisal
methodologies, in the context of several specific case studies.
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Finance
in the global market
[C242]
Financing the global firm: multinational cost of capital and capital
structure; sourcing debt and equity globally. Measuring and managing
foreign exchange exposure. Foreign investment decisions. Corporate
strategy and foreign direct investment. Foreign ventures. International
portfolio investment. Multinational capital budgeting. International
acquisitions and valuation. Country risk analysis. Multinational taxation.
Legal aspects of foreign direct investment and multinational corporations.
The International
Monetary Fund and economic policy [C213]
This course introduces a number of concepts and approaches
— in particular, disequilibrium and structuralist models of macroeconomics
and finance. One of the main aims of this course is to encourage self-directed
study. Whereas the earlier courses direct students along a firmly
structured path, this course sets the broad parameters within which
a relatively independent mode of study is encouraged, with optional
topics provided for the investigation of special interests. The macroeconomics
studied in other courses is based on equilibrium (or neo-classical)
models. In addition, this course introduces disequilibrium and structuralist
models and aims to familiarise students with the main ideas, concepts
and techniques needed to understand these models.
Dissertation
[C228]
The Research methods course covers the methodological basis
for the final dissertation. It includes methods for setting up and
carrying out research on issues in development finance and related
areas. The topic for the dissertation to be submitted by MSc students
must be approved by the Course Director and is expected to relate to
both theory and policy issues.
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