This module introduces students to key theories related to financial markets. It aims to shed light on a broad range of questions such as: What does finance posit about portfolio choice? What are the determinants of expected returns? How can one identify mispriced securities? Can investors really outperform the stock market?
The course starts with an analysis of portfolio choice. It then explores issues related to the pricing of securities in financial markets. The students will learn about the predictions of the most prominent theories and how to empirically test these predictions. Finally, the course will discuss the evidence from the “real-world”, thus enabling students to compare theory and practice. The seminar sessions will provide students with the opportunity to apply their knowledge by using real-world data to test financial market theories. Students will also develop their commercial awareness by evaluating the implications of the empirical results for market participants. The assessment is conducted via a mid-term MCQ assessment (30%) and an individual report (70%) at the end of the course. Overall, the students will develop a range of skills, including their commercial awareness, digital fluency, and communication skills.