Providing you with a strong foundation for understanding both the economics of financial markets and the main types of securities traded in these markets, this module focuses on bonds, futures, swaps and options. It strikes a balance between the theory and practice as well as making important links between models and the real world. The emphasis is on both principles and problem solving.

Topics covered include bonds, the economics of derivatives markets, futures and forwards, swaps, and options.

This module contributes to the following CFA syllabus areas:

• Securities Markets (CFA level I)

• Derivative Investments (CFA levels I and II)

• Debt Investments (CFA levels I, II and III)

In this module you will cover the basic building-blocks of finance that are of primary concern to corporate managers, and look at all the considerations needed to make financial decisions, both inside and outside the firm. The time value of money is applied to value financial securities, and the module considers in depth the relationship between risk and return. The second part of the module introduces you to the theory and practice of financing and dividend decisions.

Through this module you will gain a good understanding of the following areas: valuation of financial securities, portfolio selection and diversification, capital asset pricing model, financing decisions and efficient capital markets, capital structure and valuation for the levered firm and dividend policy.

This module contributes to the following CFA syllabus areas:

• Corporate Finance (CFA levels I and II)

• Portfolio Management (CFA levels I, II and III)

• Basic Valuation Concepts (CFA level II)

The objective of this three-week module is to ensure that you have a grounding in basic accounting concepts before progressing to the programme’s main modules.

It provides an overview of the context within which financial reporting occurs, the main components of a set of financial statements, concepts commonly accepted as underlying the production of financial statements and an introduction to basic techniques for analysing financial statements and valuing businesses.

This short three-week module acts as a primer for the Foundations of Finance module. It starts by introducing you to finance and corporate governance and then applies time value of money to value perpetuities and annuities. It also looks at the concepts of net present value and internal rate of return and builds on these to address capital-budgeting aspects of investment decisions. Although the module seeks to do this with a minimum of financial maths, to understand these topics properly you will need to invest some time in learning a few relevant formulae.

The aim of this module is to provide students with an introduction to basic concepts related to financial markets, including key categories of market participants as well as main types of securities traded in these markets.

This three-week module covers a range of basic concepts in mathematics and statistics, aiming to provide students with the necessary background toolkits for studying the “Quantitative Methods for Finance” module and other subsequent modules in accounting and finance. The topics include:

• Basics of Probability Theory
• Discrete Random Variables
• Continuous Random Variables
• Matrix Algebra and basic calculus
• Rules of Probability
• Expectation, Variance and other moments
• Introduction to Statistics

This module is designed to give you a better understanding of how professional accountants, working in a variety of environments in various countries, have attempted to use aspects of accounting theory to resolve major reporting issues. It also furthers your understanding of how academics have conceptualised and explained accounting choices.

Topics covered include the regulatory environment of financial reporting, international harmonisation of accounting standards, and contemporary issues in financial accounting.

This module contributes to the following CFA syllabus areas:

Financial Statement Analysis (CFA levels I and II)

This module will enable you to understand the key concepts and methods in data science, econometrics, and quantitative finance to carry out independent empirical work required for the job market, more advanced modules in accounting and finance and the MSc dissertation streams.

This module builds on and extends the concepts covered in the core Foundations of Finance module in the first term. The major topics covered include capital budgeting, capital structure, corporate valuation, corporate restructuring, merger and acquisitions, dividend policies, and application of real options in corporate finance. The analytical tools and financial theories discussed in the module are brought together through in an assessed report for which you work in groups to undertake comprehensive corporate finance analyses on a real company.

In lectures we will use cases based on real companies to demonstrate the links between the various areas of corporate finance. A key objective of the module is to help you explore how the financing and investment policies of firms interact with each other and how the decisions have implications for corporate valuation.

This module contributes to the following CFA syllabus areas:

• Corporate Finance (CFA levels I and II)

The aim of this course is to equip students with the tools necessary to enable them to make the core investment management decisions that managers face on a daily basis as well as the knowledge as to where they can find the information necessary to apply those tools. This course covers fundamental concepts and key issues in factor investing; equilibrium theories of asset pricing; mutual funds, ETFs and hedge funds; Environmental, Social and Governance; textual analysis in empirical asset pricing.

Designed to develop your appreciation of the main approaches to measuring, analysing and reporting information to support management decisions, this module provides insights into planning, decision-making, performance evaluation and control. The decision-making part focuses on the techniques that enable a firm to find solutions for management accounting problems; the control part provides the insights and techniques that enable a firm to bring these solutions to fruition.

The module deals with techniques that facilitate planning and decision-making such as multi-stage cost allocation and activity-based costing. But it also deals with the effects of these techniques on managerial behaviour, and how to control these behavioural effects. The module is consistent with modern micro-economic theory, but any maths content is presented in an intuitive way. Since the module brings together management accounting and modern microeconomics it will be particularly valuable for those interested in pursuing a career in consulting.

This module looks at what can happen to asset pricing in situations where market imperfections coincide with imperfections in investor rationality. It, therefore, explores the boundary between mispricing which can be exploited and that which cannot be exploited profitably.

The module lays the foundations for arbitrage, investment and wealth management, investment banking, and corporate finance. The material covered is at the frontier of academic and industry research, forming a conceptually advanced body of knowledge (CFA level III) which is of relevance for theory, research and practice.

Topics covered include:

• The efficient markets hypothesis and competing theories
• Limits to arbitrage
• Heuristics, biases and prospect theory: mental accounts and evidence in market prices
• Myopic loss aversion, disposition effect and overtrading
• Professional investors and analysts: over- and under-reaction
• Bubbles: observational and experimental, rational and non-rational
• Closed-end fund discounts, co-movement and sentiment
• The equity premium puzzle and the volatility puzzle
• Herding
• Behavioural portfolio theory

Turbulent decades of economic crises and increased volatilities across all asset classes have brought about innovative and strategic derivatives solutions to manage financial risk and create value. Their failure has typically been due to a lack of understanding of how to use and price derivatives. Understanding derivatives’ dynamics, risks, valuations and uses has become more important than ever.

Although there is a plethora of derivatives structures, the key to understanding derivatives is that all financial products, no matter how complex, are portfolios of just two fundamental building blocks: a swap (forward) and an option. This course provides this understanding in a rigorous, consistent and coherent framework.

This option is for students who do not wish to undertake one of the standard dissertation topics, and are able to find an independent supervisor.

CFA Dissertation Stream (Accounting)

The first component is a critical review and synthesis of the literature on the use of accounting numbers in business valuation. The second component of the dissertation focuses on the implementation of valuation methods. This topic is best suited for those who have followed AcF606, Financial Statement Analysis, in the Lent term.

CFA Dissertation Stream (Finance)

The first component is a critical review and synthesis of the literature on factors predicting the cross-section of equity returns. The second component of the dissertation focuses on implementation of a quantitative equity portfolio management strategy in a practical, real-word setting. This topic is best suited for those who have followed AcF602, Advanced Investment Management, in the Lent term.

Advanced Topics in Finance

Upon completion of this module you should:

• Be familiar with the context for the use of accounting numbers in valuation;

• Understand the difference between entity and equity valuation perspectives;

• Understand the theory and rationale underlying the multiples-based valuation approach, including Price-Earnings models, Price-to-Book models, etc.;

• Be familiar with the key practical issues involved in implementing multiples-based valuation models;

• Be familiar with the theory and derivation of accounting flow-based valuation models including the Free Cash Flow Model, the Residual Income Valuation Model, and the Abnormal Earnings Growth Model;

• Be familiar with the key practical issues involved in implementing accounting flow-based valuation models;

• Be able to understand, synthesise and critique key theoretical and empirical research papers relating to accounting-based valuation;

• Possess a good working knowledge of the data resources, statistical methods, and computer software required to undertake empirical research;

• Be able to design and implement a small sample analysis of brokers’ reports;

• Be able to design and undertake large-scale empirical tests that compare the performance of alternative valuation models.

Advanced Topics in Corporate Finance

Upon completion of this module you should:

• Understand the significance of debt in capital structure

• Understand the key theories used in debt contracting literature
• Know the main features of debt contracts and the role of financial covenants
• Be able to understand, synthesise and critique key research papers
• Possess a good working knowledge of the data resources, statistical methods, and computer software required to undertake empirical research
• Be able to understand and handle syndicated loan data
• Be able to design and undertake large-sample empirical tests on the topics discussed

Empirical Asset Pricing and Investment Strategies

The class introduces the fundamentals of investment strategies and some of the main strategies used by hedge funds and proprietary traders. In class and through reading exercises and discussions, the strategies are illustrated using real data and students learn to use “backtesting” to evaluate a strategy. The class is highly quantitative. It requires the students to work independently, analyse and manipulate large datasets, and use mathematical modelling.

During the five weeks (Week 1-5) of the Summer Term, it is compulsory for students to attend all the lectures and training sessions designed to provide an introduction to the key literature and research methods. Both during and following this taught component, students are required to undertake independent research that (i) reviews the academic literature relating to investment strategies and market anomalies, and (ii) reports empirical evidence of the effectiveness of a chosen investment strategy or asset pricing anomaly. This document provides details of the taught element of AcF 701.

Python and MATLAB will be introduced and used extensively for chosen investment strategy. Admitted students need to achieve at least 65% on average for their first-semester coursework. High achievement in econometrics-related subjects, previous knowledge in at least one of the following programming languages or econometric packs (e.g. EVIEWS, VBA, STATA, MATLAB, SAS, Python, R, C++, Fortran, Gauss, Mathematica), or strong desire to input hard work to learn programming will be critical for high achievement in this dissertation topic.

The aim of this module is to introduce students to the leading financial platforms used in the financial industry. In particular, the module will seek to provide students with a general understanding of the structure, type of data and functionality of the Bloomberg Professional platform.

The module has a strong practical component, as students will be using the Bloomberg Professional terminals in our Financial Markets Lab to extract, analyse and interpret data available within the platform in order to solve real-life financial problems. Through this, students will gain important insights into how financial platforms such as Bloomberg Professional are used for problem-solving within the industry.

This module equips you with the latest skills in data science, financial econometrics and quantitative finance to analyse and model asset price dynamics using techniques at the research frontier in these areas, including the work with high-frequency data, relevant for the job market (especially in Quants) and the MSc dissertation streams.

It will teach you important features of financial time series, key modelling approaches in the field, how to use high-frequency data to construct the latest volatility estimators and the most appropriate methods for forecasting price volatility and risk. It will also give you practical experience of analysing market prices, constructing volatility estimators and designing forecasting analyses through empirical projects implemented with MatLab.

This module examines the financial accounting issues that arise – from both conceptual and technical angles – for complex business entities operating within the context of International Accounting Standards, US and UK GAAP. It also assesses the impact of accounting theory in understanding and suggesting solutions to major reporting issues and examines the importance of relevant academic research to this area.

After introducing you to the nature and environment of complex entities, the module focuses on the following areas:

• Reporting financial performance: calculating earnings per share, defining income and comprehensive income, using reported income for analysis purposes

• Owner’s equity: accounting for share-based payments, reporting changes in owner’s equity

• Assets and liabilities: for example, intangible assets (including research and development), accounting for financial instruments, hedging

• Accounting for groups: business combinations, goodwill, non-controlling interests, different types of strategic relationships (associates and joint ventures), foreign currency translation

This module contributes to the following CFA syllabus areas:

• Financial Statement Analysis (CFA levels I and II)

In this module you will acquire the tools needed to analyse financial statement information, in particular for the purpose of valuing businesses. This module is heavily based on cases.

After introducing you to the basic framework of fundamental analysis, the module focuses on the form and content of financial statements, operating and financial activities in the reformulation of financial statements, and the analysis of profitability. We will also consider issues that arise in the forecasting of financial statements.

We will then look at common valuation techniques, with the attention to each technique’s advantages and disadvantages and the connections between them.

This module contributes to the following CFA syllabus areas:

• Equity Investments (CFA levels I and II)

• Financial Statement Analysis (CFA levels I and II)

Designed to develop your understanding of the principles governing the valuation of fixed income securities and their derivatives, this module examines the main problems and selected issues relevant in the management of interest rate risk, and the organisations and structure of debt markets. Topics covered include debt securities and markets, the measurement of interest rate risk, and embedded options and interest rate derivatives.

This module contributes to the following CFA syllabus areas:

• Debt Investments (CFA levels I, II and III)

This module is designed to provide students who have no or little programming experience with introduction to Python programming in the context of academic research and real-life problem solving in accounting and finance. This module aims to develop students’ interests and confidence in financial programming and analysing big financial data, and to equip students with programming skills and data-driven problem-solving abilities.