Fundamentals of Finance

financial products (stocks, bonds, derivatives, etc.) and financial markets (money markets and capital markets); organisation of exchanges (basics); types of stocks, ratios (e.g. price-earnings-ratio, book-to-market ratio), dividend discount model; portfolio theory and CAPM / APT, sensitivity measures for stocks (beta); derivatives on stocks and stock indices (forward/futures, call and put options), Valuation of forwards on stocks and stock indices; types of bonds (issuer, currency, rights of cancellation, fixed coupon vs. FRNs); spot rates, forward rates, yield to maturity, spreads; valuation of riskless bonds and sensitivity measures (modified duration, Dollar duration, Fisher/Weil duration, basis point value, modified convexity, dollar convexity, key rate duration, key rate convexity), derivatives on bonds and interest rates (FRAs, interest rate swaps, forwards/futures on bonds and interest rates, calls and puts on bonds and interest rates); valuation of FRAs, interest rate swaps and forwards on bonds and interest rates

Mode of delivery

face to face

Type

compulsory

Recommended or required reading and other learning resources/tools

Brealey, R., Myers, S., 2014, Principles of Corporate Finance, 11th ed., McGraw-Hill Education

Planned learning activities and teaching methods

Interactive teaching (lecture and discussion), Solving exercises with pencil and calculator as well as with MS Excel during the course, a trail exam, and a mini quiz.

Assessment methods and criteria

The course assessment is based on a written midterm exam (30% of the grade) and a written final exam (70% of the grade).

Prerequisites and co-requisites

Basics of Finance, Mathematics and Statistics

Infos

Degree programme

Quantitative Asset and Risk Management (Master)

Cycle

Master

ECTS Credits

5.00

Language of instruction

English

Curriculum

Part-Time

Academic year

2023

Semester

1 WS

Incoming

Yes

Learning outcome

After the successful completion of the course students are able to categorize the most important financial products, outline mayor characteristics and list important financial markets. They can apply the models of basic portfolio theory for determining optimal portfolios and comment on advantages and disadvantages of these models. Furthermore, the students can calculate various key figures for stocks, bonds and derivatives and interpret them and assess risk and return characteristics of various financial products.

Course code

0613-09-03-BB-EN-02