EC334: Topics in Financial Economics: Corporate Finance and Markets
Principal Aims
EC334-15 Topics in Financial Economics: Corporate Finance and MarketsPrincipal Learning Outcomes
Subject knowledge and understanding:...understand key concepts in corporate finance, markets and debt and equity. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures, reading, exercise question sheets, tutorial discussions. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Subject knowledge and understanding:...demonstrate knowledge of incomplete markets, dividends, and corporate financial governance. The teaching and learning methods that enable students to achieve this learning outcome are: Exercise question sheets, tutorial discussions. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Subject knowledge and understanding:...abstract and simplify basic economic problems through the application of simple theoretical methods. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures, reading, exercise question sheets, tutorial discussions. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Key Skills:...communicate knowledge and understanding of economics in written and in elementary mathematical forms. The teaching and learning methods that enable students to achieve this learning outcome are: Exercise question sheets, tutorial discussions. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Key Skills:...conduct individual and collaborative research into a finance topic, using world wide web and library resources. The teaching and learning methods that enable students to achieve this learning outcome are: Exercise question sheets. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Cognitive skills:...analyse and formulate models for understanding and solving problems. The teaching and learning methods that enable students to achieve this learning outcome are: Exercise question sheets, tutorial discussions. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Cognitive skills:...analyse competing models and hypotheses in a critical way. The teaching and learning methods that enable students to achieve this learning outcome are: Analyse competing models and hypotheses in a critical way. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Subject-specific/Professional skills:...select and apply appropriate models and techniques to particular problems, especially those of a policy nature. The teaching and learning methods that enable students to achieve this learning outcome are: Lectures, reading, exercise question sheets, tutorial discussions. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Subject-specific/Professional skills:...produce concise and analytical reports relating to financial problems and issues. The teaching and learning methods that enable students to achieve this learning outcome are: Exercise question sheets. The assessment methods that measure the achievement of this learning outcome are: Formative: exercise question sheet answers. Summative: assessment, examination.
Syllabus
The module will typically cover the following topics:
Weeks 1-3 Basics
• Real options
1. Valuing simple real options
2. Valuing compound options
• The efficient markets hypothesis
1. Market efficiency and the value of information
2. Rational expectations
3. Testing the EMH
• Hidden information and Hidden Actions
1. Basic problem
2. Contract theory
3. Signalling Weeks
Weeks 4-5 Corporate Financial Policy
1. The role of the CFO and other executives
2. Capital structure – the first Modigliani-Miller Theorem
3. Pay-out policy
Weeks 6-8 Applying the theory
1. Choice of projects by firms – (risk-shifting, debt overhang)
2. Executive compensation and managerial effort
3. Competition and efficiency
4. Changes in structure including M&A
Weeks 9-10 Topics
1. Automated financial markets
2. The wisdom of crowds? Pricing uncertainty
Context
- Optional Module
- GL11 - Year 3, GL12 - Year 4, L1P5 - Year 1, L1PA - Year 1, LM1D (LLD2) - Year 3, LM1D (LLD2) - Year 4, V7ML - Year 3, V7MM - Year 4, LA99 - Year 3, R9L1 - Year 4, R3L4 - Year 4, R4L1 - Year 4, R2L4 - Year 4, R1L4 - Year 4, L1L8 - Year 3, L1CA - Year 3, L1CA - Year 4
- Pre or Co-requisites
EC202-30 Microeconomics 2 AND EC333-15 Topics in Financial Economics: Theories and International Finance
OR
EC204-30 Economics 2 AND EC333-15 Topics in Financial Economics: Theories and International Finance OR
EC220-15 Mathematical Economics 1A AND EC333-15 Topics in Financial Economics: Theories and International
Finance OR
EC238 Economics 2: Microeconomics AND EC333-15 Topics in Financial Economics: Theories and International
Finance OR
ST339-15 Introduction to Mathematical Finance OR
IB253-15 Principles of Finance 1
Cannot be taken with EC333
Summary:Modules: (EC220-15 and EC333-15) or ST339-15 or IB253-15 or (EC202-30 and EC333-15) or (EC204-30 and EC333-15)
- Restrictions
- May not be combined with modules IB254-15
Assessment
- Assessment Method
- Coursework (20%) + Examination (80%)
- Coursework Details
- Assignment 2 (20%) , Examination (80%)
- Exam Timing
- Summer
Exam Rubric
Time Allowed: 2 Hours
Read all instructions carefully - and read through the entire paper at least once before you start entering your answers.
There are TWO sections in this paper. Answer ONE question in Section A (50 marks) and ONE question in Section B (50 marks).
Answer each whole question in a separate booklet.
Approved scientific (non-graphical) pocket calculators are allowed.
You should not submit answers to more than the required number of questions. If you do, we will mark the questions in the order that they appear, up to the required number of questions in each section.
Previous exam papers can be found in the University’s past papers archive. Please note that previous exam papers may not have operated under the same exam rubric or assessment weightings as those for the current academic year. The content of past papers may also be different.