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2013/14 Undergraduate Module Catalogue

LUBS3110 Capital Market Theory

10 creditsClass Size: 150

Module manager: Dr Moshfique Uddin
Email: .

Taught: Semester 2 (Jan to Jun) View Timetable

Year running 2013/14

Pre-requisites

LUBS2200

Business Finance 2

This module is not approved as an Elective

Objectives

On completion of this module students will be able to:
- understand the fundamentals of stock exchange investment, specifically the theoretical principles underlying stock exchange investment, concentrating on the two main characteristics of a security, risk and return;
- compare and value securities such as equities, bonds, options and futures;
- understand the principles underlying the design of an investment portfolio;
- evaluate alternative investment strategies, both those advocated in theory and those used in practice in the stock market.

Syllabus

- Introduction to the UK Stock Exchange: how securities are traded, the nature of market making
- Overseas stock exchanges
- Introduction to ordinary shares, concepts of risk and return, two item portfolio theory
- Capital asset pricing model (CAPM), its assumption and implications, single index models, concept of diagonality
- Efficient markets hypothesis: its meaning, empirical tests and its implications for investors
- Shares: fundamental and technical analysis
- Bonds, their characteristics, valuation and the term structure of interest rates
- Options: their characteristics, the binomial pricing model and the Black-Scholes model
- Warrants and convertibles
- The valuation and use of financial futures

Teaching methods

Delivery type	Number	Length hours	Student hours
Workshop	10	2.00	20.00
Private study hours			80.00
Total Contact hours			20.00
Total hours (100hr per 10 credits)			100.00

Private study

For each 10 credits of study taken, the expectation is that the normal study time (including attendance at lectures and tutorials, self-study and revision) is 100 hours.

Opportunities for Formative Feedback

Students will receive self assessment questions with model answers, notes on answers and guidance on how to answer particular types of question.

Methods of assessment

Exams

Exam type	Exam duration	% of formal assessment
Standard exam (closed essays, MCQs etc)	2 hr	100.00
Total percentage (Assessment Exams)		100.00

Normally resits will be assessed by the same methodology as the first attempt, unless otherwise stated

Reading list

The reading list is available from the Library website

Last updated: 31/03/2014

Disclaimer

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