BE312-5-SP-CO:
Foundations of Finance
2016/17
Essex Business School
Colchester Campus
Spring
Undergraduate: Level 5
Current
15
-
Requisites for this module
BE300 or EC111 or IA712
(none)
(none)
(none)
(none)
BSC N300 Finance,
BSC N301 Finance (Including Foundation Year),
BSC N302 Finance (Including Year Abroad),
BSC N304 Finance (Including Placement Year),
BSC GN13 Finance and Mathematics,
BSC GN15 Finance and Mathematics (Including Placement Year),
BSC GN1H Finance and Mathematics (Including Year Abroad)
The course carefully examines the basic building blocks of modern finance theory and focuses on the theoretical and analytical cornerstones on which the building blocks are placed. We study how these building blocks can, in certain cases, help us identify potentially optimal decisions now, even though the future consequences of those decisions are yet uncertain.
A common feature of finance is the need to make good use of and where possible best use of limited resources; constrained optimization techniques can often guide us in this need. Basic concepts in probability are used in finance to describe the inevitable uncertainty regarding the future. Most of us dislike risk and prefer to avoid risk, though only if the price for avoiding that risk is acceptable. We study how expected utility theory helps us measure how averse we are to taking such risks.
We then proceed to use these building blocks to examine several concepts: choice under uncertainty, maximizing returns and minimizing risk subject to constraints, mean-variance analysis and net present value.
COURSE AIM
The aim of this course is to familiarize you with the basic mathematical tools and the analytical skills necessary to understand modern finance theory.
COURSE OUTCOMES
On completion of the course you should be able to
1. Apply basic mathematical techniques and tools used in modern finance.
2. Describe and evaluate measures of risk aversion using expected utility theory.
3. Understand the concept of 'efficient frontier' when investing in risky assets.
4. Evaluate choices using the net present value approach.
No information available.
No information available.
No additional information available.
Lectures:
There will be one lecture per week, each of two hours duration, for ten weeks. The primary function of the lecture is to introduce a topic and the main ideas and issues relating to the topic. Lectures are not the venues for describing computational details (for that we use classes). You are expected to do the relevant reading before the lecture. It is strongly recommended, however, that
this should not be the only time you stumble on to the relevant material.
Classes:
There will be one class per week associated with each lecture, each of one-hour duration, for ten weeks. The class will lag the corresponding lecture by one week. There are weekly class exercises, which will normally be released before the relevant class but after the associated lecture. You are advised to make an attempt at all the exercises. Class work will need to be handed in each week
but are neither marked nor evaluated. Several exercises are solved using the mathematical software called Maple, which can be accessed from the course page on Moodle. It is good to know how to use at least one mathematical and modelling software and Maple is very good for that.
Assessment items, weightings and deadlines
| Coursework / exam |
Description |
Deadline |
Coursework weighting |
| Coursework |
TEST 2 |
|
|
| Coursework |
ASSIGNMENT 1 |
|
|
| Coursework |
ASSIGNMENT 2 |
|
|
| Written Exam |
TEST 1 |
|
|
| Exam |
Main exam: 120 minutes during Summer (Main Period)
|
Exam format definitions
- Remote, open book: Your exam will take place remotely via an online learning platform. You may refer to any physical or electronic materials during the exam.
- In-person, open book: Your exam will take place on campus under invigilation. You may refer to any physical materials such as paper study notes or a textbook during the exam. Electronic devices may not be used in the exam.
- In-person, open book (restricted): The exam will take place on campus under invigilation. You may refer only to specific physical materials such as a named textbook during the exam. Permitted materials will be specified by your department. Electronic devices may not be used in the exam.
- In-person, closed book: The exam will take place on campus under invigilation. You may not refer to any physical materials or electronic devices during the exam. There may be times when a paper dictionary,
for example, may be permitted in an otherwise closed book exam. Any exceptions will be specified by your department.
Your department will provide further guidance before your exams.
Overall assessment
Reassessment
Module supervisor and teaching staff
Hardy Thomas
ebsugcol@essex.ac.uk
Yes
Yes
No
No external examiner information available for this module.
Available via Moodle
Of 82 hours, 82 (100%) hours available to students:
0 hours not recorded due to service coverage or fault;
0 hours not recorded due to opt-out by lecturer(s).
Disclaimer: The University makes every effort to ensure that this information on its Module Directory is accurate and up-to-date. Exceptionally it can
be necessary to make changes, for example to programmes, modules, facilities or fees. Examples of such reasons might include a change of law or regulatory requirements,
industrial action, lack of demand, departure of key personnel, change in government policy, or withdrawal/reduction of funding. Changes to modules may for example consist
of variations to the content and method of delivery or assessment of modules and other services, to discontinue modules and other services and to merge or combine modules.
The University will endeavour to keep such changes to a minimum, and will also keep students informed appropriately by updating our programme specifications and module directory.
The full Procedures, Rules and Regulations of the University governing how it operates are set out in the Charter, Statutes and Ordinances and in the University Regulations, Policy and Procedures.