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1. COURSE OBJECTIVES
This course introduces students to the major theoretical models used by financial economists in the area of investment analysis. The purpose of this course is to acquaint the student with basic principles of finance theory emphasizing the theory of the firm's investment and financing decisions. To accomplish this goal, this course will focus on basic concepts of consumption and investment decision making under risk, market efficiency, asset pricing, portfolio theory and market equilibrium. The course starts with the theory of choice under certainty and uncertainty and applies it to the choice of the investment portfolio. Building on the portfolio theory, risk and return are considered to optimize investors’ utility. Capital budgeting techniques are analysed to understand project evaluation. Capital market and firm valuation are discussed in the later part of the course. The course concludes with the market equilibrium, CAPM and asset pricing theory.
2. COURSE CONTENT
No.
Content
Time Allocation
Contribution to CLO
Hour(s) on the class
Essays, exercise,
Assignments
Self-study with teacher’s tutorials
Lecture
Practice, Seminar
1
Chapter 1: Introduction: capital markets, consumption and investment
2
1
1
5.5
1,8
2
Chapter 1 (continued)
2
1
1
5.5
1,8
3
Chapter 2: Investment decisions: the certainty case
2
1
2
5.5
1,8
4
Chapter 2 (continued)
2
1
1.5
5.5
3,7,8
5
Chapter 3: Theory of choice: utility theory given uncertainty
2
1
1.5
5.5
2,7,8
6
Chapter 3 (continued)
2
1
1
5.5
2,7,8
7
Chapter 4: State preference theory
2
1
1.5
5.5
2,7,8
8
Chapter 4 (continued) and Mid – term Exam
2
1
1.5
5.5
5,7,8
9
Chapter 4 (continued)
2
1
2
5.5
5,7,8
10
Chapter 5: Object of choice: Mean – variance portfolio theory
2
1
1.5
5.5
4,7,8
11
Chapter 5 (continued)
2
1
1.5
5.5
4,7,8
12
Chapter 5 (continued)
2
1
2
5.5
4,7,8
13
Chapter 6: Market equilibrium: CAPM and APT
2
1
1.5
5.5
6,7,8
14
Chapter 6 (continued)
2
1
2
5.5
6,7,8
15
Chapter 6 (continued)
2
1
1
5.5
6,7,8
Total
30
15
22.5
82.5
3. COURSE ASSESSMENT
- Score ladder: 10
- Type of assessment
Form
Content
Criteria
CLO
Proportion
Formative
Attendance
The number of attendances and participation in lesson
1-6,9
10%
Midterm exam
Issues have been studied
MCQ /+ essay questions
(60 minutes)
1,2,3,7-9
30%
Summative
Final test
Written exam
(60 minutes)
1-9
60%
Total:
100%