This module will provide a review of asset valuation, modern portfolio theory, investment analysis and portfolio management. This module will begin with an overview of the financial markets and instruments. In the first part of the module we will examine the valuation of assets, equities, fixed income instruments, and the fundamentals of foreign exchange. We the examine portfolio theory – the principles of risk and return and portfolio diversification. Finally we apply the theory to practice, learning about active and passive portfolio management and performance evaluation. Students will be also presented with an opportunity to actively work on and manage TU Dublin’s Student Managed Fund. This module prepares students for a career in the financial services industry and will be of particular benefit to those who wish to pursue careers in equity research and/or trading.
Introduction
Introduction and general description of role and function of different types of securities and instruments on capital markets. Understand different types of investments for fund portfolios.
Investment Strategies
Methods of passive management strategies versus active management strategies and overall investment strategies of fund managers including diversification. Analyse literature of different types of strategies commonly used.
Valuation
The role that valuation plays in different investment philosophies. An overview of detailed approaches to valuation - discounted cash flow valuation, and comparable/relative valuation.
Dividend Policy
The relationship between earnings and dividends. Dividends and capital structure, firm ownership and whether dividend decisions can affect the value of the firm.
Risk Management
Have a competent understanding of the portfolio allocation and financial risk management literatures, as well as of recent and relatively advanced developments in asset pricing and portfolio theory which help tackle the financial risk management and portfolio allocation problems.
Portfolio Theory
Portfolio expected returns and standard deviation. Incorporate modern portfolio theory, asset pricing and CAPM and the optimum portfolio
Economic Environment
Assess the economic factors and macro-economic trends affecting the market.
Corporate Governance
The role of corporate governance in the funds industry. The rules, regulation and requirements necessary to set up a fund. Corporate goals, the principal agent conflict and shareholder wealth maximisation.
Fintech
Introduction into the role Financial Technology (Fintech) plays in the transformation of modern finance. A framework to understand Fintech innovation. The role of cloud computing, artificial intelligence, blockchain and peer to peer lending in modern finance. The rise of ICOs and cryptocurrencies.
Financial Reporting Frameworks and Audit of Funds
Preparation and understanding of fund accounts. Become familiar with annual reports of investment portfolio specific companies. The role of the external auditor in the funds industry and the role and function of the internal audit department, and contrast this with the role of the external auditor.
The Portfolio Selection Process
The correlation structure of security returns, grouping techniques, industry and international diversification.
Management of Real-Life Fund
Active management of the TU Dublin Student Managed Fund – Stock pitches, valuing stock, analysing risk of the fund, monthly net asset value (NAV) reports, preparation of fund accounts and selecting stocks to buy/sell which will be co-ordinated through the Student Managed Fund designated broker. Students will also prepare an annual report for the purpose of the governance of the fund and to for the external sponsors to examine the performance of the fund.
Current Developments in Capital Markets
Up to date literature on changes in capital markets, current topics and trends in the financial services industry such as algorithmic trading and the emergence of cryptocurrencies.
This will involve formal lectures, case studies, class discussions, assignment work, group work, stock pitches, podcasts, videos, group meetings and presentations. There will also be guest speakers from the financial services industry to discuss practical and current issues within the industry.
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Formal Examination | 50 |
| Other Assessment(s) | 50 |