BE-419 Finance Theory
- ECTS Credits:
- 7.5
- Responsible department:
- School of Business and Law
- Course Leader:
- Valeriy Ivanovich Zakamulin
- Lecture Semester:
- Spring
- Teaching language:
- English
- Duration:
- 1 term
The course is connected to the following study programs
- Master's Programme in Accounting and Auditing
- Master's Programme in Business Administration
- Master's Programme in Business Administration (5 years)
Teaching language
EnglishRecommended prerequisites
Bachelor level courses in Mathematics, Statistics, Investment and Finance
SE-412 Quantitative Financial Economics or equivalent.
Course contents
The aim of the course is to provide a detailed treatment of the main theoretical foundations of the modern financial theory. The course presents in-depth coverage of the mean-variance portfolio theory, capital asset pricing model (CAPM), arbitrage pricing theory (APT), and Black-Scholes option pricing theory. A particular emphasis is placed on the derivation of the theoretical asset pricing models and a rigorous mathematical argumentation.
Learning outcomes
Upon successful completion of this course students should have a solid understanding of the theoretical foundations of contemporary financial theory, in particular:
-
tradeoff between risk and reward
-
optimal capital allocation between the risky and risk-free assets
-
mathematics of mean-variance portfolio theory and construction of efficient portfolios
-
capital market equilibrium and the capital asset pricing model
-
arbitrage pricing theory and multifactor models
-
portfolio performance measurement
-
absence of arbitrage condition in pricing of derivative securities
-
continuous-time Black-Scholes model for option pricing
-
valuation of different types of options using binomial trees
Examination requirements
Approved mandatory assignments. More information will be given in Canvas at the start of the semester.
Teaching methods
The course consists of lectures and group-work sessions. Estimated workload is about 200 hours.
Evaluation
The study programme manager, in consultation with the student representative, decides the method of evaluation and whether the courses will have a midterm- or end of term evaluation, see also the Quality System, section 4.1. Information about evaluation method for the course will be posted on Canvas.
Assessment methods and criteria
4-hour written examination with letter grades.
Reduction of Credits
This course’s contents overlap with the following courses. A reduction of credits will occur if one of these courses is taken in addition:
| Course | Reduction of Credits |
|---|---|
| BE-411 – Derivatives and Risk Management | 2.5 |
| BE-415 – Investments | 2.5 |
| BE-511 – Derivatives | 2.5 |
| BE-421 – Investments | 2.5 |