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Investment Analysis

Module Code: EC305C

Module Title: Investment Analysis

  • ECTS Weighting: 5
  • Semester/Term Taught: Hilary Term
  • Contact Hours: 22 hours of lectures and 4 hours of tutorials
  • Module Personnel: Lecturer - Eleanor Denny

Module Learning Aims

This module analyses, at both a practical and theoretical level, the process of investment in financial markets. Its aims are to introduce students to the various types of financial instruments in common use, to the economic theories that explain how they are priced, to the risks factors which affect their pricing and to the markets in which they are traded. The types of securities considered include interest-bearing securities and derivatives (options, futures, etc.). Students are also required to complete a project involving the collection and analysis of financial data.

Learning Outcomes

On successful completion of this module, you will be able to:

  • Explain the components of bond pricing and interpret the factors influencing bond risk
  • Discuss measures of bond price sensitivity and relate risk factors to the current situation in the bond markets
  • Understand how asset backed securities are structured and their role in the financial crisis
  • Describe the main features of futures, forwards, swaps and credit derivatives
  • Outline the payoffs of various option strategies
  • Illustrate the uses of derivatives for risk management

Module Content

  • Bond prices and yields
  • Term structure of interest rates
  • Managing bond portfolios
  • Introduction to options
  • Futures and forwards
  • Swaps and credit derivatives

Recommended Reading List

Primary Text: Investments, Zvi Bodie, Alex Kane and Alan J. Marcus, 7th edition, London : McGraw-Hill/Irwin, 2008. (Earlier editions will also suffice)
Supplementary Text: Options, Futures and Other Derivatives, John Hull, 6th edition, London: Prentice Hall, 2006

Module Pre Requisite

EC2010, EC2040

Assessment Details

Project worth 30% of module marks, final exam worth 70% of module marks.

Module Website