EC349-Financial Economics

Module Provider: School of Politics, Economics and International Relations
Number of credits: 20 [10 ECTS credits]
Level:6
Terms in which taught: Autumn term module
Pre-requisites: EC113 Introductory Microeconomics and EC116 Introductory Mathematics for Economics 1 or EC113 Introductory Microeconomics and IC104 Introductory Quantitative Techniques for Business and Finance or EC113 Introductory Microeconomics and EC121 Introductory Mathematics for Economics 2 or IC103 Introductory Economics for Business and Finance and IC104 Introductory Quantitative Techniques for Business and Finance or EC125NU Introductory Quantitative Methods in Economics and Business
Non-modular pre-requisites:
Co-requisites:
Modules excluded:
Current from: 2023/4

Module Convenor: Dr Mark Guzman
Email: m.g.guzman@reading.ac.uk

Type of module:

Summary module description:

This module has two parts. The first part covers financial decision making in an idealised world with certainty and in a more complex world with uncertainty and market imperfections. The second part covers recent developments in financial markets and securities.

Aims:

This module aims to provide a rigorous coverage of the economic reasoning underpinning much of modern finance, including portfolio theory and asset pricing. It will apply neoclassical financial analysis both as intellectual contributions on their own and as a set of guidelines to financial decision making in the more complex world of uncertainty and market imperfections. It will also discuss the role of financial intermediation in facilitating investment, like via mutual funds, as well as developments in financial products and services.

Assessable learning outcomes:

By the end of the module, it is expected that the student will be able to

• Explain how individuals and firms make financial decisions under certainty


• Discuss the models informing investment decisions relating to forming investment portfolios and pricing risky assets


• Discuss the benefits and risks of non-traditional securities, including derivatives


• Appreciate the role of financial intermediaries facing capital market imperfections.

Additional outcomes:

Students will improve their ability to translate abstract theoretical concepts into practical solutions to financial problems.

Outline content:

Financial decision making under certainty and in a perfect capital market; Decision making under risk; Selection and pricing of risky assets; Asset pricing models; Organisation of a modern financial system and the role of financial intermediaries; Innovations in financial products and services.

Brief description of teaching and learning methods:

 A combination of lectures, discussions of assigned topics and problems, and assessed coursework.

Contact hours:

	Autumn	Spring	Summer
Lectures	20
Guided independent study:	180
Total hours by term	200	0	0
Total hours for module	200

Summative Assessment Methods:

Method	Percentage
Report	50
Set exercise	50

Summative assessment- Examinations:

There is no summer term examination for this module.

Summative assessment- Coursework and in-class tests:

Set Exercise and Report:  Coursework will include one problem set (set exercise) on Part A and one report on Part B, each worth 50% of the final module mark.

Formative assessment methods:

Worked examples, problem solving based class activities, and open discussions during the classes.

Penalties for late submission:

The Support Centres will apply the following penalties for work submitted late:

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of five working days;
• where the piece of work is submitted more than five working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

The University policy statement on penalties for late submission can be found at: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/cqsd-old-site-documents/penaltiesforlatesubmission.pdf
You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Assessment requirements for a pass:

A minimum overall mark of 40%.

Reassessment arrangements:

Re-assessment is by submitting the summative component(s) not passed.  This will be a different piece of coursework on similar topics for each part (A and B) of the module. 

Additional Costs (specified where applicable):

1) Required text books: 

• Frank J. Fabozzi, Edwin H. Neave and Guofu Zhou, Financial Economics, John Wiley and Sons, 2012. It is not essential to buy the hardcopy as copies are available from the library. 


• Mishkin and Eakins, Financial Markets and Institutions, Pearson, 8th edition or above, Global edition, 2016. E-book access is available from the Library at no extra cost. 

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: 12 July 2023