financial

Module Size and credits

Entry Requirements (pre-requisites and co-requisites)

None

Excluded Combinations

None

Composition of module mark (including weighting of components)

25% Coursework and 75% Exam

Pass requirements

Coursework must be at least 35% and Exam must be at least 35% and Module Mark must be at least 40%

Special Features

None

Course stages for which this module is mandatory

· BESU043 BA Stage 2 Business and Finance

· BESU158 BA Stage 2 Finance and Investment

Course stages for which this module is a core option

· BESU069 BA Stage 2 Business Administration

· BESU157 BA Stage 2 Economics Studies

· BESU199 BA Stage 2 Business Administration (Part-Time)

· BESU208 BSc Stage 2 Finance

· BESU151 BA Stage 2 Financial Studies

· BESU041 BA Stage 2 Accounting and Finance

· BESU192 None Stage 1 Contemporary studies

· BESU151 BA Stage 3 Financial Studies

2. TEACHING, LEARNING AND ASSESSMENT

Intended Module Learning Outcomes

Indicative Content

1. Banks, Building Societies, and money markets. Financial intermediation. The creation of money. The Bank of England. Money market instruments: deposits, loans, certificates of deposit, bills, commercial paper. Retail and wholesale banking.

2. Mortgages. The operation of repayment and endowment mortgages. Characteristics of repayment mortgages and the effects of changes in interest rates and terms to maturity. Alternative interest rate structures (variable, fixed, capped, discounted). The implications of the term structure of interest rates and of embedded options. The mortgage and endowment equations. The Miles Report on the UK mortgage industry.

3. Stock markets. Functions of stock exchanges. Types of stock exchange. Globalisation of stock markets. Primary and secondary markets. Market depth and breadth. Order-driven and quote-driven systems. Types of share. Issuing shares.

4. Bonds. Characteristics of gilts. Types of gilt. Issuing gilts. Bond prices and interest rates. Corporate bonds. Credit rating. International bonds. Alternative forms of coupon payment.

5. Institutional investments. Unit trusts, OEICs, investment trusts, investment bonds. Individual Savings Accounts. Life assurance, endowment policies, whole-of-life policies. With-profits, without-profits, and unit-linked funds. Actively-managed versus index-tracker funds. Effects of fund charges and taxation on returns. Pound cost averaging. The Sandler Report on the UK savings industry.

6. Pensions. Defined benefit versus defined contribution. Occupational pensions, Additional Voluntary Contributions, personal pensions, stakeholder pensions. Conventional annuities; the annuity equation. Alternative forms of annuity. The demographic timebomb.

7. Personal financial decisions. Capital risk and income risk: market risk, specific risk, interest rate risk, default risk, credit risk, liquidity risk, inflation risk, exchange rate risk, event risk, political risk. Investor circumstances: attitudes, investment horizons, existing assets, liabilities, income, taxation. Risk management and insurance. Behavioural finance: the psychology of investing and risk perception.

8. Regulation of financial services. Asymmetric information. Costs of monitoring and the free-rider problem. Delegated monitoring. Akerlof’s lemons and investor confidence. Institutional capture. Moral hazard.  Self-regulation versus statutory regulation. Methods of regulation: capital requirements, conduct-of-business rules, separation of assets, disclosure requirements, auditing, investor compensation. The Financial Services Authority.

.

Teaching and Learning

Lectures and seminars

Student activity and time spent on each activity comprises:

Method Of Assessment (normally assessed as follows)

The intended learning outcomes will be assessed as follows:

Learning outcome 1 will be assessed by a 1500 word piece of coursework (5 credits).  Any student who makes a bona fide attempt at this assignment will have the opportunity to attempt a second equivalent assignment, with the better of the two marks counting as the module coursework mark.

Learning outcomes 1, 2, and 3 will be assessed by an end-of-session 3 hours unseen examination (15 credits)

Please note that no coursework will be marked until an identical electronic copy has also been submitted into the module web for a plagiarism check.

 Re-assessment: Coursework and/or examination as appropriate.

Date of last amendment

February 2010

3. MODULE RESOURCES