Checking date: 28/04/2022


Course: 2022/2023

Financial Economics
(13166)
Study: Dual Bachelor in Computer Science and Engineering, and Business Administration (233)


Coordinating teacher: SERRANO JIMENEZ, PEDRO JOSE

Department assigned to the subject: Department of Business Administration

Type: Compulsory
ECTS Credits: 6.0 ECTS

Course:
Semester:




Requirements (Subjects that are assumed to be known)
- Mathematics for Economics I - Mathematics for Economics II
Objectives
At the end of the course students should be able to: - Compute present and future values of cash-flow streams to compute the net present values of different real and financial investments. - Have a basic knowledge of the functioning of financial markets and of the way in which investment decisions are made. - Understand the risk-return tradeoff. Understand how diversification affects risk. - Have a clear understanding of the difference between systematic and diversifiable risk and know how to measure each. - Understand how interest rates are set and the principles of valuation of fixed income securities. - Know the basic types of derivatives and understand why and how they are used in risk management.
Skills and learning outcomes
Description of contents: programme
Financial Economics -1. Introduction to Financial Markets a.Financing investment in the economy b.Financial markets and trading financial assets -2. Financial Mathematics a.Introduction: The time value of money b.Simple and compound interest. Equivalent interest rates. c.Present and Future Values. d.Annuities -3. Investment Appraisal a.Cash flows b.Determining current and future values c.Net present value of an investment project d.Internal rate of return e.Other valuation techniques -4. Risk and Return a.Mathematical representation of a portfolio b.Expected portfolio returns c.Variance and standard deviation d.Finding the minimum variance portfolio e.Graphical representation of expected return and standard deviation of a portfolio -5. Portfolio Theory a.Diversification Effect b.Assumptions of the Mean-Variance Analysis c.The Efficient Frontier d.The tangency portfolio -6. The Capital Asset Pricing Model (CAPM) a.Relationship between risk and expected return b.The CAPM model c.The CML and The SML d.Portfolio Beta -7. Fixed Income Securities a.Valuation of fixed income b.The term structure of Interest Rates c.Forward interest rates d.Default risk e.Risk Management -8. Derivatives Products a.Types of derivatives b.Pricing Principles Reference text books: - Marín, J.M. and G. Rubio (2011), Economía Financiera, Antoni Bosch. - Grinblatt, M. and S. Titman (2003), Financial Markets and Corporate Strategy, McGraw Hill. Other useful books: - Bodie, Z., Kane, A. and Marcus, A. J. (1999), Investments, McGraw Hill (Fouth Edition). - Brealey R., S. C. Myers and F. Allen (2006), Principles of Corporate Finance, 8th edition, McGraw Hill.
Learning activities and methodology
Learning activities in year 2020/2021 str based on a bimodal system: lectures will be given on an online basis, onsite teaching when it comes to the reduced groups. 1.- Theory (online)- Sessions. The instructor of the course teach the basic concepts of the topic. Classnotes are provided to the students. 2.- Solution to exercises. The student must solve the test to assess his/her degree of knowledge of the different concepts. This part comprises the individual work of the student at home. 3.- Exercises - Sessions (onsite). The instructor of these sessions solves the exercise sets provided to the students.
Assessment System
  • % end-of-term-examination 60
  • % of continuous assessment (assigments, laboratory, practicals...) 40
Calendar of Continuous assessment
Basic Bibliography
  • José M. Marín; Gonzalo Rubio. Economía Financiera. Antoni Bosch. 2011
  • Mark Grinblatt; Sheridan Titman. Financial Markets and Corporate Strategy. McGraw-Hill Education - Europe. 2011
Additional Bibliography
  • Bodie Zvi, Kane Alex, Marcus Alan. Essentials of Investments, 6th Edition. McGraw Hill. 2005
  • Brealey R., S. C. Myers and F. Allen. Principles of Corporate Finance, 8th Edition. McGraw Hill. 2006

The course syllabus may change due academic events or other reasons.