IDM082-The Economics of Financial Markets
Module Provider: APD
Number of credits: 10 [5 ECTS credits]
Level:7
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded: ECM132 The Economics of Financial Markets
Current from: 2021/2
Module Convenor: Dr Tho Pham
Email: [email protected]
Type of module:
Summary module description:
The primary focus of this module is on understanding the underlying economic reasoning behind how asset prices are determined and how portfolio allocation decisions are made. This includes having an understanding of 1) the theory of choice and the objects of choice faced by an investor; 2) the optimal portfolio decision; 3) equilibrium asset prices; 4) equilibrium portfolio allocations given price and risk preference.
Aims:
The primary focus of this module is on understanding the underlying economic reasoning behind how asset prices are determined and how portfolio allocation decisions are made. This includes having an understanding of 1) the theory of choice and the objects of choice faced by an investor; 2) the optimal portfolio decision; 3) equilibrium asset prices; 4) equilibrium portfolio allocations given price and risk preference.
Assessable learning outcomes:
Students should be able to explain how asset prices are determined. They should be able to explain how investment decisions under certainty and uncertainty are made. They should be able to explain and critique the most prominent theories seeking to explain how portfolios are constructed.
Additional outcomes:
Students will learn skills required to do relevant research, write reports, understand technical articles and apply theoretical knowledge to real world situations.
Outline content:
Main topics include inter-temporal optimisation of consumption, investment decision given certainty, introduction to expected utility theory, mean-variance portfolio theory, capital asset pricing model, capital market imperfections.
Brief description of teaching and learning methods:
Detailed guidance on the topics covered will be provided in the 10 x 2 hours weekly lectures (and 1 x 1-hour revision class), together with comprehensive handouts covering the material discussed, examples, exercises and solutions to facilitate understanding of key concepts. Students may be required to do exercises corresponding to each topic, to read a significant amount of journal articles, and to undertake research using the library, internet, etc.
| Autumn | Spring | Summer | |
| Lectures | 21 | ||
| Guided independent study: | 79 | ||
| Total hours by term | 0 | 100 | 0 |
| Total hours for module | 100 |
| Method | Percentage |
| Project output other than dissertation | 50 |
| Class test administered by School | 50 |
Summative assessment- Examinations:
Summative assessment- Coursework and in-class tests:
One in-class test (50%) and one written project output (50%).
Formative assessment methods:
Open discussion, worked examples, problem solving based class activities during the lectures.
Penalties for late submission:
The below information applies to students on taught programmes except those on Postgraduate Flexible programmes. Penalties for late submission, and the associated procedures, which apply to Postgraduate Flexible programmes are specified in the policy Penalties for late submission for Postgraduate Flexible programmes, which can be found here: https://www.reading.ac.uk/web/files/qualitysupport/penaltiesforlatesubmissionPGflexible.pdf
The Support Centres will apply the following penalties for work submitted late:
- where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days;
- where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.
You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.
Assessment requirements for a pass:
A minimum weighted average mark of coursework and examination of 50%.
Reassessment arrangements:
Re-examination for all modules takes place in August/September of the same year. Re-assessment is by examination only; coursework is not included at the second attempt (i.e., students who fail the in-class test can sit in the resit exam in August/September of the same year).
Additional Costs (specified where applicable):
1) Required text books: (Recommended, but not a compulsory purchase) is Frank J. Fabozzi, Edwin H. Neave and Guofu Zhou, Financial Economics, John Wiley and Sons, 2012. Hard copies are available in the library.
2) Specialist equipment or materials:
3) Specialist clothing, footwear or headgear:
4) Printing and binding:
5) Computers and devices with a particular specification:
6) Travel, accommodation and subsistence:
Last updated: 15 December 2021
THE INFORMATION CONTAINED IN THIS MODULE DESCRIPTION DOES NOT FORM ANY PART OF A STUDENT'S CONTRACT.