Module code: ECO2054

Module Overview

The module investigates investors’ decisions in modern financial markets and explores the effects of these choices on the asset allocation and risk pricing

Module provider


Module Leader

LAZOPOULOS Ioannis (Economics)

Number of Credits: 15

ECTS Credits: 7.5

Framework: FHEQ Level 5

Module cap (Maximum number of students): N/A

Overall student workload

Independent Learning Hours: 128

Lecture Hours: 22

Module Availability

Semester 2

Prerequisites / Co-requisites


Module content

Indicative content includes:

  • Market Efficiency;

  • Choice under certainty and the two fund separation theorem;

  • Portfolio management;

  • Capital asset pricing model;

  • Determination of firms’ cost of capital;

  • Arbitrage pricing theory;

  • Option pricing and risk management.

Assessment pattern

Assessment type Unit of assessment Weighting

Alternative Assessment

Not applicable A weighted aggregated mark of 40% is required to pass the module. 

Assessment Strategy

The assessment strategy is designed to provide students with the opportunity to demonstrate:

Awareness of financial market efficiency and investors’ behaviour, critical understanding of portfolio management and equilibrium pricing models, ability to evaluate the use of financial options in risk management.

Thus, the summative assessment for this module consists of:

  • 30% Class test – multiple choice and short essay/problem solving questions.

  • 70% Final Exam: consists of two essay/problem-solving questions out of a choice of four.

The multiple choice tests provide an effective way to examine students' understanding of underlying concepts and theories as well as technical aspects of the material covered in the module as outlined in the learning outcomes and module content.

The essay/problem-solving questions comprised by extended-response essays and problem-solving questions designed to assess the learning outcomes.

Formative assessment and feedback

Feedback is provided on a continuous basis in the form of verbal feedback through dicussion of open-ended questions during lectures or questions provided in the tutorial problem sets. Students also receive detailed solutions to tutorial questions/exercises against which they can compare their answers. Throught the availability of previous exam papers and the provision of mock coursework questions, students are able to familirise themselves with the structure of the assessment. Moreover, the marked coursework scripts provide students with individual feedback on their learning and identify potential weaknesses to enhance their performance.

Module aims

  • Help students to understand a broad set of important concepts and tools in modern finance;
  • Help students to understand the main theories on how investment decisions affect asset pricing, and how financial instruments are used for hedging and arbitrage.

Learning outcomes

Attributes Developed
1 Evaluate investment and consumption choices under certainty ; KC
2 Display a sound grasp of the concepts of risk aversion and risk premium KCT
3 Exhibit a clear knowledge of the theory underlying the allocation of funds across assets and portfolio synthesis in equilibrium KCP
4 Discuss how modern asset pricing theory builds on optimal choice under uncertainty;
5 Appreciate equilibrium pricing models such as the capital asset pricing model and the arbitrage pricing theory ; KCP
6 Show how financial derivatives can be used in risk management . KCP

Attributes Developed

C - Cognitive/analytical

K - Subject knowledge

T - Transferable skills

P - Professional/Practical skills

Methods of Teaching / Learning

The learning and teaching strategy is designed to:

  • enhance written and verbal presentation skills as well as problem-solving and analytical skills

  • appreciate the complexity of the theories that explain the investors’ behaviour and asset pricing under uncertainty

The learning and teaching methods include:

  • 2 hour lecture per week x 11 weeks

Indicated Lecture Hours (which may also include seminars, tutorials, workshops and other contact time) are approximate and may include in-class tests where one or more of these are an assessment on the module. In-class tests are scheduled/organised separately to taught content and will be published on to student personal timetables, where they apply to taken modules, as soon as they are finalised by central administration. This will usually be after the initial publication of the teaching timetable for the relevant semester.

Reading list
Upon accessing the reading list, please search for the module using the module code: ECO2054

Programmes this module appears in

Programme Semester Classification Qualifying conditions
Economics and Finance BSc (Hons) 2 Compulsory A weighted aggregate mark of 40% is required to pass the module

Please note that the information detailed within this record is accurate at the time of publishing and may be subject to change. This record contains information for the most up to date version of the programme / module for the 2020/1 academic year.