Core Module Information:

Taught by:

Michael Manlangit
MSc Management Route B, Finance pathway, Masters & PGT all depts.
Term 2
2-hour lecture (x 10 weeks) and 1-hour seminar (x 9 weeks)
60% unseen 2-hour examination; 40% coursework

This module introduces students to capital markets. As economic globalisation has broadened the possibility of where capital can be raised and then invested, our perspective is necessarily international. We will analyse financial actors (e.g. issuers, commercial and investment banks and other intermediaries, and institutional investors) and the dynamics of their interactions as capital is exchanged using financial instruments to generate returns while managing risk. We will analyse the context in which these actors operate, i.e. the markets, as well as the regulations that are imposed on these markets. Considering recent history, there will be an exploration of financial crises and the roles of regulation and compliance in affecting their occurrence and outcomes.

To establish a base level of understanding of financial concepts, this module will make use of a required text. However, the material will also include readings from recent case studies, news reports, and academic journals. The emphasis will be to impart students with a general as well as current understanding of the behaviour of financial actors, the market environment in which they operate, and the regulations to which they must comply.

Upon successful completion of the module, a student will be able to:

  • Identify and describe the main financial actors in capital markets, e.g. government and corporate issuers, banking intermediaries, and institutional investors, e.g. pension funds and insurers.
  • Understand the motivations and incentives that guide the behaviour of financial actors and their interaction.
  • Understand the international market environment that brings financial actors together to exchange capital.
  • Identify and describe the financial instruments, e.g. stocks, bonds, and derivatives, used by financial actors that exchange capital to generate returns and manage risk.
  • Understand the rationale that underpins government intervention in the markets to influence and control financial actors’ behaviour and interactions with each other.
  • Understand how regulation and compliance can lead to unintended consequences and leave the financial markets exposed to financial crises.
  • Financial actors, e.g. issuers, intermediaries, and institutional investors
  • Economic theory including rationality and profit maximisation, information asymmetry, moral hazard, and adverse selection
  • Risk and return
  • Financial instruments – stocks, bonds, and derivatives – and their valuation
  • Interaction dynamics between financial actors
  • Capital and other markets
  • Regulation and compliance
  • Global history of financial crises

60% is awarded on the basis of your examination results in an unseen, 2-hour paper in the Summer Term. 40% is awarded for coursework comprising a written submission of 1,500 words.

Arnold, G. (2012). Modern financial markets & institutions: a practical perspective. Harlow, England: Pearson Education Limited, Financial Times Press.