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Financial Markets

Overview

  • Credit value: 30 credits at Level 6

Module description

This module aims primarily to familiarise you with the principles of finance. It will introduce you with the characteristics of equity, fixed income and derivatives markets, and provides grounding in financial models that would enable them to evaluate different financial assets. You will be introduced to option pricing theory, as well as to issues related to credit risk.

You will be equipped with the necessary knowledge of the financial markets, ready to work as practitioners in the financial industry.

Learning objectives

By the end of the module, you should be able to:

  • understand and make use of financial statements
  • explain the time value of money and calculate present values of future cash flows and net present values of real investment projects
  • understand the characteristics of equity, fixed income and derivative markets
  • derive and apply pricing models for shares including the discounted-dividend model
  • price bonds and extract interest rates from bond data
  • understand different derivative securities such as forwards, futures, swaps and options
  • explain the no-arbitrage principle and apply this to the pricing of derivative securities using both Black-Scholes option pricing model and the Binomial model
  • understand the issues related to credit risk.