EC349: Financial Economics

Module code: EC349

Module provider: Economics; School of Philosophy, Politics and Economics

Credits: 20

Level: Level 3 (Honours)

When you'll be taught: Semester 1

Module convenor: Dr Mark Guzman, email: m.g.guzman@reading.ac.uk

Pre-requisite module(s):

Co-requisite module(s):

Pre-requisite or Co-requisite module(s):

Module(s) excluded:

Placement information: NA

Academic year: 2024/5

Available to visiting students: Yes

Talis reading list: Yes

Last updated: 12 September 2024

Overview

Module aims and purpose

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 discuss the role of financial intermediation in facilitating investment, like via mutual funds, as well as developments in financial products and services.

Module learning outcomes

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

1. Explain how individuals and firms make financial decisions under certainty
2. Discuss the models informing investment decisions relating to forming investment portfolios and pricing risky assets
3. Discuss the benefits and risks of non-traditional securities, including derivatives
4. Appreciate the role of financial intermediaries facing capital market imperfections.

Module content

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

Structure

Teaching and learning methods

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

Study hours

At least 20 hours of scheduled teaching and learning activities will be delivered in person, with the remaining hours for scheduled and self-scheduled teaching and learning activities delivered either in person or online. You will receive further details about how these hours will be delivered before the start of the module.

Please note the independent study hours above are notional numbers of hours; each student will approach studying in different ways. We would advise you to reflect on your learning and the number of hours you are allocating to these tasks.

Semester 1 The hours in this column may include hours during the Christmas holiday period.

Semester 2 The hours in this column may include hours during the Easter holiday period.

Summer The hours in this column will take place during the summer holidays and may be at the start and/or end of the module.

Assessment

Requirements for a pass

Students need to achieve an overall module mark of 40% to pass this module.

Summative assessment

Penalties for late submission of summative assessment

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

Assessments with numerical marks

• 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 three working days;
• the mark awarded due to the imposition of the penalty shall not fall below the threshold pass mark, namely 40% in the case of modules at Levels 4-6 (i.e. undergraduate modules for Parts 1-3) and 50% in the case of Level 7 modules offered as part of an Integrated Masters or taught postgraduate degree programme;
• where the piece of work is awarded a mark below the threshold pass mark prior to any penalty being imposed, and is submitted up to three working days after the original deadline (or any formally agreed extension to the deadline), no penalty shall be imposed;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

Assessments marked Pass/Fail

• where the piece of work is submitted within three working days of the deadline (or any formally agreed extension of the deadline): no penalty will be applied;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension of the deadline): a grade of Fail will be awarded.

The University policy statement on penalties for late submission can be found at: https://www.reading.ac.uk/cqsd/-/media/project/functions/cqsd/documents/qap/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.

Formative assessment

Formative assessment is any task or activity which creates feedback (or feedforward) for you about your learning, but which does not contribute towards your overall module mark.

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

Reassessment

Additional costs