Portfolio Management

• Credit value: 30 credits at Level 6
• Convenor: Ken Hori
• Prerequisites: Principles of Finance. Also this course is quantitative in nature and you are expected to have as a minimum skills taught in Quantitative Techniques I
• Assessment: examination (80%) and coursework (20%)

This standalone module provides an introduction to the theory and practice of portfolio construction and management. It begins with a treatment of the basic financial instruments such as bonds and shares and their derivatives including futures and options. The financial theory of the valuation of these derivative securities is then used as a basis to discuss trading strategies. The module also deals with the monitoring and evaluation of risky portfolios. A recent inclusion is the discussion of credit derivatives (CDO and CDS) and their role in the recent credit crisis.

By the end of this module, you will:

• understand the processes of speculation and arbitrage and be able to identify strategies that exploit trading and arbitrage opportunities
• understand the functions of portfolio managers and their role in assessing the objectives and constraints of the investor client
• know how to measure, adjust and assess realised portfolio performance
• understand the role of hedging in portfolio management and be able to design efficient hedging strategies.