IC102: Introductory Finance/Trading Simulation I

Module code: IC102

Module provider: ICMA Centre; Henley Business School

Credits: 20

Level: 4

When you'll be taught: Semester 2

Module convenor: Dr Gita Persand, email: gita.persand@icmacentre.ac.uk

Module co-convenor: Dr Yoke Yue Kan, email: y.y.kan@henley.edu.my

Pre-requisite module(s):

Co-requisite module(s):

Pre-requisite or Co-requisite module(s):

Module(s) excluded:

Placement information: na

Academic year: 2024/5

Available to visiting students: Yes

Talis reading list: No

Last updated: 19 November 2024

Overview

Module aims and purpose

The aim of the module is to introduce students to the core concepts of Finance, starting with Capital Budgeting when students are familiarised with the Time Value of Money, i.e., interest rates with regards to discounting and compounding. The next step is to introduce Asset Pricing when students start pricing equities and bonds, following which they construct portfolios of stocks and calculate risk and returns based on the Capital Asset Pricing Model. Practical examples are provided in Excel. Derivatives pricing and hedging strategies are covered at the end of the module when students have gained the required skills. 

The module also introduces trading simulation. The purpose of the trading simulation is to introduce students to computer simulation of securities dealing. We have the IC Trader, which is an in-house software package based on a quote-driven OTC market in equities from US and EU companies and in FX with major currency pairs as well as in options. Prices are artificially generated so that students can focus on price action and news flow affecting the prices of shares. We teach risk management techniques i.e., knowing your level of risk, ensuring that it is appropriate and stays within specified limits, as well as good trading principles of running profits and cutting losses. Students are graded for their performance in dealing room sessions based on profitability, liquidity provision through two-way pricing with other dealers and facilitating client orders.

The module lead at the °ÄÃÅÁùºÏ²Ê¿ª½±¼Ç¼ Malaysia is Dr Yoke Yue Kan.

Module learning outcomes

By the end of the module, it is expected that students will be able to:

• acquire trading skills in the Trading Simulation sessions, by maximising profits while buying and selling equities, currencies, and options.
• apply the concept of time value of money with regards to discounting and compounding in the context of financial firms.
• price financial assets such as stocks and bonds and of financial derivatives such as futures contracts and options as well as incorporating the concept of market efficiency in the financial markets.
• construct portfolios of assets and estimating the risk and returns of a risky asset based on the Capital Asset Pricing Model.

Module content

1. Capital Budgeting

2. Stocks

3. Bonds

4. Portfolio Theory

5. Capital Asset Pricing Model

6. Efficient Market Hypothesis

7. Futures and Forwards

8. Hedging with futures

9. Properties of Options

10. Options Pricing Model

Structure

Teaching and learning methods

Formal lectures, during which students are strongly encouraged to ask questions.

Seminars, during which the Teaching Assistants will be discussing the answers to the seminar questions which students have to prepare in advance.

Module Convenor and Teaching Assistants have dedicated office hours during which students can be offered extra support, either face-to-face or online.

This module may be taught in a different Semester if you are studying at our campus in Malaysia.

For students studying at our campus in Malaysia: This module may be taught in a different semester and the breakdown of study hours may differ to those set out in the Study Hours table (please refer to the Module Handbook for the correct breakdown). In addition, you will be required to complete an additional 40 hours of study, taking the total number of study hours to 240 for this module. This is to comply with the Malaysian Quality Agency (MQA).

Study hours

At least 45 hours of scheduled teaching and learning activities will be delivered in person, with the remaining hours for scheduled and self-scheduled teaching and learning activities delivered either in person or online. You will receive further details about how these hours will be delivered before the start of the module.

Please note the independent study hours above are notional numbers of hours; each student will approach studying in different ways. We would advise you to reflect on your learning and the number of hours you are allocating to these tasks.

Semester 1 The hours in this column may include hours during the Christmas holiday period.

Semester 2 The hours in this column may include hours during the Easter holiday period.

Summer The hours in this column will take place during the summer holidays and may be at the start and/or end of the module.

Assessment

Requirements for a pass

40% weighted average mark of individual and group assignments.

Summative assessment

Penalties for late submission of summative assessment

The Support Centres will apply the following penalties for work submitted late:

Assessments with numerical marks

• where the piece of work is submitted after the original deadline (or any formally agreed extension to the deadline): 10% of the total marks available for that piece of work will be deducted from the mark for each working day (or part thereof) following the deadline up to a total of three working days;
• the mark awarded due to the imposition of the penalty shall not fall below the threshold pass mark, namely 40% in the case of modules at Levels 4-6 (i.e. undergraduate modules for Parts 1-3) and 50% in the case of Level 7 modules offered as part of an Integrated Masters or taught postgraduate degree programme;
• where the piece of work is awarded a mark below the threshold pass mark prior to any penalty being imposed, and is submitted up to three working days after the original deadline (or any formally agreed extension to the deadline), no penalty shall be imposed;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension to the deadline): a mark of zero will be recorded.

Assessments marked Pass/Fail

• where the piece of work is submitted within three working days of the deadline (or any formally agreed extension of the deadline): no penalty will be applied;
• where the piece of work is submitted more than three working days after the original deadline (or any formally agreed extension of the deadline): a grade of Fail will be awarded.

The University policy statement on penalties for late submission can be found at: /cqsd/-/media/project/functions/cqsd/documents/qap/penaltiesforlatesubmission.pdf

You are strongly advised to ensure that coursework is submitted by the relevant deadline. You should note that it is advisable to submit work in an unfinished state rather than to fail to submit any work.

Formative assessment

Formative assessment is any task or activity which creates feedback (or feedforward) for you about your learning, but which does not contribute towards your overall module mark.

Multiple-choice questions are made available to students to practise throughout the semester.

Ongoing feedback throughout the lectures, seminars, and Trading Simulation classes.

Reassessment

Additional costs