The course provides a comprehensive introduction to main fundamentals of financial markets and various financial instruments available for investing, funding operations as well as financial markets efficiency and possible financial risks. The course covers four major topics in financial markets such as demand for and pricing of financial assets, markets for underlying and derivative securities, organization of the markets and focus on the role of hedge funds.
- Students will understand the fundamental principles of financial markets theory, including risk measurement, investment decisions, modern portfolio theory, main asset pricing models, efficient market hypothesis and behavioural alternatives.
- They will be familiar with the various instruments, their use, their differences. The best students will start developing a systemic view of the financial markets.
- Moreover, they will be able to demonstrate this global understanding of the financial markets industry, the players and the roles in their discussions with recruiters and market participants.
- They will be able to understand and comment articles from relevant financial publications.
- They will be able to apply the basic techniques and skills necessary for operating at beginner level in several areas in the capital markets, including origination, research, buy- or sell-side, and thus speed up or enhance investment, financing or strategic performance.
Course Content (Topics and subtopics):
Topic 1. Demand for and Pricing of Financial Assets:
- Measuring Risk and Risk Aversion
- Modern Portfolio Theory
- Asset Pricing Models (CAPM, APT)
- Efficient Market Hypothesis
- Behavioral Finance
Topic 2. Underlying Financial Market Instruments:
- Rate instruments (FX&MM, Fixed Income, Credit)
- Equity instruments
- Hybrid products
Topic 3. Markets for Derivative Securities:
- Introduction to financial risk management
- Forward and Future Contracts
Topic 4. Organisation of Capital Markets:
- History and financial centres
- Sell side and issuance advisory
- Exchanges and support functions
- Buy side
- Hedge Funds
Course Reading (the full list):
- Fabozzi, F.J., Modigliani, F., and F.J. Jones (2014), Foundations of Financial Markets and Institutions, 4th ed., Pearson, Prentice Hall.
1. Berk, J., and DeMarzo P. (2011), Corporate Finance, 2nd ed., Pearson
2. Hull, J.C. (2009), Options, Futures, and Other Derivatives, 7th ed., Upper Saddle River, N.J.: Pearson, Prentice Hall.
3. Danthine, J.-P., and J.B. Donaldson (2005), Intermediate Financial Theory, 2nd ed., Amsterdam; Boston, Mass.: Elsevier.
4. Essentials of Investments, Bodie Zvi, Alex Kane & Alan J. Marcus, McGraw-Hill
5. Campbell, J.Y., Lo A.W., and A.C. MacKinlay (1997), The Econometrics of Financial Markets, Princeton, NJ: Princeton University Press.