IC102-Introductory Finance/Trading Simulation I

Module Provider: ICMA Centre
Number of credits: 20 [10 ECTS credits]
Level:4
Terms in which taught: Spring term module
Pre-requisites:
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Current from: 2019/0

Module Convenor: Dr Gita Persand

Email: g.persand@icmacentre.ac.uk

Type of module:

Summary module description:

This module is delivered at University of Reading and University of Reading Malaysia.



This module aims to provide the student with an overview of the financial system. This will include an overview of the role that the financial system plays in the economy, a discussion of some of the main players in the system, the instruments they trade, and the trading prices. Part of the module will focus on capital markets and the private and public financial institutions participating in these markets. The remainder of the module covers the time value of money, longer-term securities like bonds, risky securities like stocks, and the way in which returns and the values of real and financial assets relate to each other. The purpose of the trading simulation part of the module is to introduce students to computer simulation of securities dealing and spreadsheet modelling. Students are taught the relevant theory and will experience how this theory works in a virtual dealing environment. 


Aims:

Assessable learning outcomes:


  • Estimate the fundamental / intrinsic value of traditional financial assets 

  • Compare and contrast the different types of financial instruments and their risk-return characteristics 

  • Identify the forces affecting rates of return in international financial markets 

  • Recognise the effects of the violation of the efficient markets hypothesis on the pricing of assets in financial markets 

  • Produce the security market line using a set of asset returns and variances 

  • Recognise the relationship between current prices and future cash flows 

  • Pricing of derivatives such as options and futures contracts. 


Additional outcomes:

Through active reading of the financial press, students will be able to apply the theoretical skills they have gained in order to interpret and evaluate current events in financial markets. Students will be able to develop their problem-solving skills by learning to reveal hidden information contained within accounting-based financial statements. 


Outline content:



  • Capital Budgeting: valuation based discounted cash flows (time value of money) 




  • Valuation of equities 




  • Interest rates and bond valuation 




  • Risk and Return 




  • Capital asset pricing model 




  • Market Efficiency 




  • Futures and Forward markets 




  • Hedging with futures contracts 




  • Introduction to Options 




  • Options pricing  





 


Brief description of teaching and learning methods:
Lectures will be used for the exposition of theory. Classes will be used to discuss non-assessed problem sets and case studies.

Contact hours:
  Autumn Spring Summer
Lectures 20
Seminars 8
Practicals classes and workshops 10
Guided independent study:      
    Wider reading (independent) 20
    Wider reading (directed) 30
    Exam revision/preparation 46
    Advance preparation for classes 20
    Preparation for seminars 16
    Revision and preparation 30
       
Total hours by term 0 200 0
       
Total hours for module 200

Summative Assessment Methods:
Method Percentage
Written exam 70
Practical skills assessment 10
Class test administered by School 20

Summative assessment- Examinations:

One 2.5-hour unseen written paper


Summative assessment- Coursework and in-class tests:

Other information on summative assessment:

(1) Multiple Choice Test: 30 questions to be answered in 1 hour (Week 28)

(2) Trading Simulation I Test (Week 30)

(3) Final Examination (May/June)


Formative assessment methods:

Penalties for late submission:
The Module Convener 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[1] (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.

  • The University policy statement on penalties for late submission can be found at: http://www.reading.ac.uk/web/FILES/qualitysupport/penaltiesforlatesubmission.pdf
    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 mark of 40%.

    Reassessment arrangements:

    Re-sit examination to be taken in August/September.


    Additional Costs (specified where applicable):

    1) Required text books: Principles of Corporate Finance, by Brealey/ Myers/Allen, 2017, 12 Edition, McGraw-Hill. RRP £50.00. 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: 8 April 2019

    THE INFORMATION CONTAINED IN THIS MODULE DESCRIPTION DOES NOT FORM ANY PART OF A STUDENT'S CONTRACT.

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