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Semester 1

Investment and Securities Markets (BUST10032)

Subject

Business Studies

College

CAHSS

Credits

20

Normal Year Taken

3

Delivery Session Year

2023/2024

Pre-requisites

Visiting students must have completed at least 4 Business courses at grade B or above. This MUST INCLUDE at least two Finance courses at introductory level and at least one Finance course at intermediate level. In addition, students must have at least one Statistics course at intermediate level or Econometrics course at introductory level; and at least one Calculus or Optimisation course at introductory level. This course cannot be taken alongside BUST08003 Principles of Finance or BUST08030 Introduction to Corporate Finance. We will only consider University/College level courses.

Course Summary

The course begins with an overview of securities markets. It then covers the Modern Portfolio Theory and the Single-Index Model. The Capital Asset Pricing Model is discussed next. The second half of the course focuses on the areas of market efficiency, behavioural finance, and international investing. This course is restricted to MA Accounting and Finance; MA Finance and Business; MA Economics with Finance programmes only. Year 3 MA Business with Strategic Economics students are also permitted to take this course.

Course Description

The course aims to develop an understanding of the theory and practice of investment and securities markets. It provides the concepts and tools which will help graduates cope in the increasingly sophisticated investment markets. Discussion of academic research is combined with an emphasis on practical application. Succeeding in the course depends on solid understanding and ability to apply the tools of statistical hypothesis testing, linear regression, calculus and optimisation. The first half of the course involves numerous derivations and in-depth understanding of three key finance models: Markowitz portfolio optimisation model, Single Index Model and Capital Asset Pricing Model. The second half of the course involves high level discussion and comparison of these different theoretical models and their extensions. Outline Content - overview of securities markets; - introduction to risk and return; - optimal risky portfolios; - index models; - the Capital Asset Pricing Model; - the Efficient Market Hypothesis; - behavioural finance and technical analysis; - empirical evidence on security returns; - international diversification. Student Learning Experience The lectures provide an overview of each topic together with brief discussion of one or two journal articles relating to that topic. The student learning comes from reading the chapters of books, finance texts and journal articles recommended, practicing assigned exercises and answering test questions. Students need mathematical (basic optimisation), statistical (hypotheses tests) and econometric (regression interpretation) knowledge to be able to do the work in this class.

Assessment Information

Written Exam 70%, Coursework 30%, Practical Exam 0%

view the timetable and further details for this course