IDM082-The Economics of Financial Markets

Module Provider: APD
Number of credits: 10 [5 ECTS credits]
Terms in which taught: Spring term module
Non-modular pre-requisites:
Modules excluded:
Current from: 2020/1

Module Convenor: Dr Minyan Zhu


Type of module:

Summary module description:

The primary focus of this module is on understanding the underlying economics behind how asset prices are determined and how portfolio allocation decisions are made. This includes having an understanding of 1) the theory of choice and the objects of choice faced by an investor; 2) the optimal portfolio decision; 3) equilibrium asset prices; 4) equilibrium portfolio allocations given price and risk preference.

Assessable learning outcomes:
Students should be able to explain how asset prices are determined. They should be able to explain how investment decisions under certainty and uncertainty are made. They should be able to explain and critique the most prominent theories seeking to explain how portfolios are constructed.

Additional outcomes:
Students will learn skills required to do relevant research, write reports, understand technical articles and apply theoretical knowledge to real world situations.

Outline content:
Basic topics include: inter-temporal optimisation of consumption, investment decision given certainty, expected utility theory, state preference theory, mean-variance portfolio theory, CAPM.

Brief description of teaching and learning methods:
Detailed guidance on the topics covered will be provided in the 10 x 2 hours weekly lectures, together with comprehensive handouts covering the material discussed, examples, exercises and solutions to facilitate understanding of key concepts. Students may be required to do exercises corresponding to each topic, to read a significant amount of journal articles, and to undertake research using the library, internet, etc.

Contact hours:
  Autumn Spring Summer
Lectures 20
Guided independent study: 80
Total hours by term 100
Total hours for module 100

Summative Assessment Methods:
Method Percentage
Class test administered by School 100

Summative assessment- Examinations:

Summative assessment- Coursework and in-class tests:
Coursework will count for 100% of the overall mark and comprises: one mid-term test (50%) and one end of term test (50%).

Formative assessment methods:

Penalties for late submission:
Penalties for late submission on this module are in accordance with the University policy. Please refer to page 5 of the Postgraduate Guide to Assessment for further information:

Assessment requirements for a pass:
A weighted average coursework mark of 50%.

Reassessment arrangements:
By examination only (coursework will not be included in the re-assessment) in August/September of the same year.

Additional Costs (specified where applicable):
1) Required text books:
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: 4 April 2020


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