BE331-6-QA-:
The Pricing of Securities in Financial Markets
2025/26
Essex Business School
Autumn - Partner
Undergraduate: Level 6
Current
Thursday 02 October 2025
Friday 12 December 2025
15
17 September 2024
Requisites for this module
(none)
(none)
(none)
(none)
(none)
This module involves around the theoretical foundations of some widely used pricing models for securities traded in financial markets, i.e. equities, options and bonds. For equities, models such as the Gordon growth model, the Classical CAPM, and the APT are frequently used by applied researchers and by practitioners. Similarly, the Black-Scholes formula, along with CRR (Cox-Ross-Rubinstein) binomial model, is often utilized in option pricing in practice.
While such applied works take the end product (the model) for granted as a black box, this module is aimed at explaining the theoretical foundations of these models from a unified viewpoint so that the students should be able to appreciate the usefulness and/or the weakness of these models after taking the module.
The aim of this module is:
- To provide a rigorous treatment of asset pricing literature including CAPM, and the fundamental theorem of asset pricing and its applications in pricing contingent claims.
By the end of this module, students will be expected to be able to:
- Understand the economic concepts associated with the fundamental theorem of asset pricing and to appreciate its usefulness in finance.
- Apply the fundamental theorem for pricing contingent claims, and to be able to establish the relationship between the price of primary securities and those of derivative securities.
- Derive CRR binomial option pricing model by applying the fundamental theorem.
- Understand the mathematics associated with the mean-variance analysis and portfolio choices by rational investors.
The module is designed for third year finance students. It may have appeal to accounting and management students possessing a technical bent, to similarly inclined economics students with an interest in financial economics, and to mathematics students interested in financial markets.
This module will be delivered via:
Class exercises will be announced one week in advance, and in principle, students will be appointed on site to work on the questions on the whiteboard in the classes. Hence, students are expected to work on all exercises in advance. Works can be handed in for corrections and comments. Also, as mentioned above, three in-class quizzes will take place during classes, without any prior announcements.
This module does not appear to have a published bibliography for this year.
Assessment items, weightings and deadlines
| Coursework / exam |
Description |
Deadline |
Coursework weighting |
| Exam |
Main exam: In-Person, Open Book, 120 minutes during Partnership
|
| Exam |
Reassessment Main exam: In-Person, Open Book, 120 minutes during Partnership
|
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
Dr Luiz Vitiello, email: lrviti@essex.ac.uk.
Dr Luiz Vitiello & Dr Nicholas Rowe
ebsugcol@essex.ac.uk
No
No
No
No external examiner information available for this module.
Available via Moodle
No lecture recording information available for this module.
* Please note: due to differing publication schedules, items marked with an asterisk (*) base their information upon the previous academic year.
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