Syllabus
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.
[Top]
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.
[Top]
Corporate governance
[C244]
This
course analyses legal/political/economic features of
major corporate governance systems, examining how
corporate governance systems influence the performance
of individual firms and the allocation of capital within
a country. It investigates the evolution of diverse
ownership and governance structures across different
economies.
Unit 1 Definitions of corporations and corporate
governance
Unit 2 Theory of the firm
Unit 3 Corporate governance and the role of law and
the state
Unit 4 Corporate governance systems: equity-led,
bank-led and family-led
Unit 5 Control and board composition
Unit 6 Control and CEO compensation
Unit 7 International corporate governance
Unit 8 Corporate governance guidelines and codes of
best practice in developed, developing and transition
economies
[Top]
Banking and capital markets
[C226]
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.
[Top]
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.
[Top]
Bank regulation and
resolution in banking crises (currently under
development)
Bank crises occur frequently in many countries and
across many time periods. Many go beyond the distress of
individual banks and have systemic effects, threatening
the banking system as a whole. Since the nineteenth
century governments and central banks have developed
increasingly sophisticated methods to regulate banks in
order to minimize the risk of bank distress and
intervention tools to mitigate its effect. Since crises
recur, as in the USA and United Kingdom in 2007, they
motivate heightened discussion of the merits of
regulation and intervention and their design. In this
course you study technical aspects of bank regulation,
supervision, and intervention to resolve crises. It
relates the techniques to fundamental principles and to
examples of countries' experience.
[Top]
Risk management: principles and
applications
[C223]
Risk management: principles and applications examines
the techniques and the foundation of risk management in
corporations. It covers the use of derivatives,
portfolio allocation, the value of risk, and the
management of credit risk and operations risk. This
course has four main aims: to illustrate the main types
of risk; to present the most important ideas and methods
used in the analysis of portfolios of financial
securities, (including stocks and bonds); to explain how
rational investors can use financial derivatives (mainly
futures and options) in order to alter the risk of their
investment position; and to illustrate some more
specialised risk management techniques (such as Value at
Risk and Credit Risk).
Unit 1 Introduction to risk management
Unit 2 Portfolio analysis
Unit 3 Management of bond portfolios
Unit 4 Futures markets
Unit 5 Options markets
Unit 6 Risk management with options
Unit 7 Value at risk
Unit 8 Credit risk
[Top]
Econometric principles and data analysis
[C230]
This
course examines the interaction and confrontation
between economic theory and economic data. It is
concerned with the use of statistical and mathematical
methods in analysing economic data, with the aim of
providing economic theories with sufficient empirical
foundation to enable them to be verified or refuted.
Central attention is given to regression analysis — the
major tool of statistical analysis in econometrics, to
hypothesis testing and the treatment of
heteroscedasticity and autocorrelation. The MICROFIT
computer package is provided for regression analysis and
diagnostic procedures. Econometrics is concerned with
quantifying economic relations, with the provision of
numerical estimates of the parameters involved and
testing hypotheses embodied in economic relationships.
This course aims to provide a basic introduction to
econometric analysis, to enable students to examine
economic theories with empirical data. In doing so, it
examines the difficulties inherent in confronting theory
with economic data in order to quantify economic
relationships, in dealing with errors and problems in
variables which can be only observed but not controlled,
and the means of compensating for uncertainty in data.
Econometric principles and data analysis is
extended by Econometric analysis and applications,
which teaches more advanced techniques in quantitative
methods. This course can be studied in its own right but
normally expected to be taken as part of the
MSc or Postgraduate Diploma programme which provides the
theoretical background required to interpret empirical
data using statistical techniques.
[Top]
Econometric analysis and applications
[C232]
This is
the second econometrics course that can be taken as part
of the MSc. It extends the basic introduction to
econometric analysis developed in the core course,
Econometric principles and data analysis. This course
teaches the more advanced techniques of dummy variables,
lags and expectations, simultaneous equation models,
non-stationarity and co-integration and forecasting. The
course ends with a brief discussion of ‘further topics
for econometrics’ for students who are particularly keen
to develop their quantitative skills beyond the course.
It assumes that students have studied the classical
linear regression model at an introductory level and
that are familiar with the assumptions which underlie
the model. It is also assumed that they have a basic
working knowledge of the econometric software, MICROFIT.
There are many examples to illustrate the main themes in
a way which will help you in both understanding the
econometrics and putting the theory to use with data.
This course aims to broaden knowledge and extend
understanding of econometrics. By the end of the course
students should be able to: make progress with
qualitative regressors, dummy variables and the
identification and estimation of simultaneous
econometric models; show how lags and expectations can
be incorporated in dynamic models; and forecast with
both econometric and time series models.
[Top]
Financial econometrics
(currently under development)
Financial markets and others generate vast amounts of
data on asset returns, their volatility, and other
financial variables in long and high-frequency time
series. The ability to analyse market behaviour requires
knowledge of the properties of time series and
appropriate estimation methods. Since the early 1980s
techniques for analysing time series which exhibit
auto-regression have yielded important studies of
financial markets, increasing our knowledge of financial
variables’ volatility. In this course you study time
series techniques and their application to financial
markets. Before starting this course students should
normally have completed the course Econometric Analysis
and Applications [C232].
[Top]
Derivatives (currently under development)
The expansion of financial markets since 1973 has been
founded on the growth of derivatives, both over the
counter derivative contracts and exchange traded
contracts. It was made possible by the development of
models for valuing derivatives based upon the
mathematics of stochastic calculus. In this course you
learn the application of those principles to the
valuation of derivatives.
[Top]
International finance
[C229]
This
course is concerned with the institutions of
international finance and the key policy problems that
have arisen in recent decades. It presents a
policy-oriented perspective, similar to that an
economist would use when advising governments on how to
work within the modern international financial system
and how to overcome its problems. The course aims to
familiarise students with the three key concepts
necessary for understanding the problems of policy
formulation within the international financial system:
the institutional structure of the modern international
financial system; the principles of financial policy
analysis for an open economy; and the principles
affecting some current policy issues in international
finance.
[Top]
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.
[Top]
Macroeconomic policy and financial
markets
[C225]
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.
[Top]
Microeconomic principles and policy (currently under
development)
This course is currently under development. Please check
back here soon for more information about the course.
[Top]
Public financial management: planning and
performance
[C201]
In this course you will be introduced to the methods and
issues of public financial management. You will examine
subjects including cost management, budgeting,
expenditure control techniques, accounting for public
spending and performance budgeting.
[Top]
Public financial management: revenue
[C205]
In this course you will study the theory and practice of
public finance with special reference to how governments
raise revenues and how they use taxation to pursue
policy aims. The course is mainly concerned with
taxation, borrowing and aid.
[Top]
Project appraisal and impact analysis
[C207]
This course will give you a theoretical and applied
background to investment finance. You will study the
project cycle from project identification to project and
programme appraisal techniques, and including financial
and economic analysis, impact assessment and risk
analysis.
[Top]
Modelling firms and markets (currently under
development)
You will study not only the behaviour of individual
firms, but also how firms interact with each other in
competitive and non-competitive markets. The course will
look at models of stratgeic behaviour based on the tools
of game theory and how firms inteact under conditions of
imperfect formation. This course is currently under
development. Please check back here soon for more
information about the course.
[Top]
Research methods
[C253]
The purpose of the course is to provide students with a
thorough understanding of the theoretical concepts,
methodological approaches and reporting issues that
underpin good quality research projects. It is a
prerequisite course for completing a dissertation. The
course outlines the issues involved in planning,
designing, executing and reporting research. In addition
it provides students with the opportunity to develop
quantitative and qualitative skills, depending on the
dissertation topic and research interests.
[Top]
Dissertation
[C254]
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 Programme Director and is expected to
relate to both theory and policy issues.
