ICM402: Financial Securities and Markets

Module code: ICM402

Module provider: ICMA Centre; Henley Business School

Credits: 20

Level: 7

When you'll be taught: Semester 1

Module convenor: Dr Miriam Marra, email: m.marra@icmacentre.ac.uk

Module co-convenor: Dr Alfonso Dufour, email: a.dufour@icmacentre.ac.uk

Pre-requisite module(s): This module builds on the content covered in the pre-sessional module Building Blocks of Finance and Maths and Stats for Finance. Students are expected to have completed this pre-sessional module prior to the start of ICM402 (Open)

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: No

Talis reading list: No

Last updated: 19 November 2024

Overview

Module aims and purpose

This module focuses on fixed income and equity securities evaluation and provides an introduction to international financial markets and an overview of financial institutions.  

Part I of the module applies general valuation methods to specific financial instruments: fixed income and equity securities. It describes the basic characteristics of each security and develops practical strategies for finding its value and assessing its risk.  

In Part II, the main characteristics and risks of a range of financial markets are presented: equity, fixed income, foreign exchange, futures and commodity markets. A series of interactive workshops are used to learn about ethical investing and alternative trading systems. The aim of part II is to provide an economic framework for understanding global financial markets, financial institutions, market players and the importance of liquidity and price efficiency.  

This module is core for several financial programmes. It provides a rigorous academic framework for assessing security values, interpreting changes in the price of financial instruments, managing risks, and comparing alternative market structures. Also, it provides a practical group project and trading simulation sessions, where students will gain hands-on experience with trading in alternative market structures. 

Module learning outcomes

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

• Explain financial securities valuation models via application of time value of money, derivation of the yield curve, and use of fundamental analysis at macroeconomic, industry, and firm level. 
• Illustrate two main categories of financial securities risk (credit and interest rate risk) by providing a clear definition of the nature, measurement, and mitigation of the risk (credit ratings, credit derivatives, duration-based measures of interest rate risk). 
• Explain the structure of the global financial system and illustrate the role of central banks, financial institutions, and the functions of finance; and critically discuss the importance of liquidity and price efficiency.  
• Identify the main features of global financial markets in bonds, stocks, foreign exchange and commodities; describe the major players in each market, the role of intermediaries and alternative market mechanisms; and execute real world pricing and trading strategies through ad-hoc simulations. 

Module content

Part I:Financial Securities and Valuation 

Topic 1. Fixed Income: Bond prices and yields. Introduction to default risk. 

Topic 2. Fixed Income: Term structure of interest rates. 

Topic 3. Fixed Income: Interest rate risk and essentials of risk management. 

Topic 4. Equities: Economic, industry, and financial statement (fundamental) analysis. 

Topic 5. Equities: Valuation models. 

Part II:Financial Markets and Institutions  

Topic 1.Overview of the financial services industry and the purpose of finance and investment.  

Topic 2.Financial institutions and central banks. Why financial institutions exist. Liquidity and transaction costs, adverse selection, price discovery, market efficiency. 

Topic 3.Traders, markets and exchanges, and the trading process.  

Topic 4.Equity markets, Fixed income and money markets, Forex Markets.  

Topic 5.Futures and Commodities markets: features and risks.  

Structure

Teaching and learning methods

The module combines several teaching and learning methods to help students achieve the stated objectives: 

• Weekly lectures, 
• Additional readings provide current and applied examples of the topics, 
• Seminars, in which students are encouraged to develop their analytical skills or discuss about non-assessed coursework set by the instructors.  
• Discussion board: Blackboard Learn may be used to maintain a discussion board relating to the module where the instructors would post discussion threads and moderate the forum. 
• Trading simulations with alternative trading systems: oral auctions and electronic trading. 
• INVEST Sessions with Grade Point Cash counting towards the final grade. Students are exposed to trading financial assets through simulations. 

Study hours

At least 43 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

50% 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.

Ongoing feedback throughout all lectures, seminars and workshops 

Sample multiple-choice questions via Blackboard 

Practice trading sessions 

Reassessment

Additional costs