The Financial Instruments and Markets curricular unit provides future managers with fundamental basic knowledge of how financial markets work and how financial instruments are used for financial investment or speculation, and risk protection. Methodologies and analysis techniques in the area of finance will be explored, namely with regard to investment and financing decisions, under risk and uncertainty.
Objectives and learning outcomes
The objectives are the follows: 1. Know the main financial markets 2. Know the main stock exchanges 3. Evaluate and characterize the main financial instruments 4. Assess the risk of a financial investment 5. Evaluate the performance of a portfolio
Skills to be developed: Know the main financial markets Define the best short, medium and long-term investment option, using appropriate valuation techniques; Understanding the risk and return concept of a financial instrument and an investment portfolio
Programme
1. Introduction
2. Stock Exchange 2.1 Bolsas de valores e índices bolsistas 2.2 Instrumentos financeiros negociados em bolsa 2.3 Sessões e ordens de bolsa 2.4 Sistemas de negociação
3.Share Market 3.1 Concept and type 3.2 Profitability and Risk 3.3 Operations and evaluation
4. Bond Market 4.1 Concept and type 4.2 Profitability and Risk 4.3 Operations and evaluation
5. Other Financial Instruments 5.1 Investment Funds 5.2 Derivatives 5.2.1 Forward Contracts 5.2.2 Futures Contract 5.2.3 Options 5.2.4 Swaps 5.2.5 Differential Contracts 5.2.6 Other types of derivatives
6. Exchange Market 6.1 Agents and assets 6.2 Speculation, Arbitration and Risk Coverage 6.3 Spot and forward market 6.4 Exchange rate forecasts
7. Yield, Risk and Diversification 7.1 Type of risk and diversification strategies 7.2 Valuation of a portfolio
8. Capital Market Model 8.1 Capital Asset Pricing Model (CAPM) 8.2 Arbitrage Pricing Theory (APT) 8.3 CAPM vs. APT
Demonstration of the syllabus coherence with the curricular unit's learning objectives
The first objective "Know the main financial markets" is addressed in chapter 1 of the program, where all types of financial markets are characterized and segmented. The 2nd objective "Know the main stock exchanges" is explored in the second chapter, which presents the main financial markets, types of sessions, stock exchange orders and trading systems. The third objective " Evaluate and characterize the main financial instruments " is developed in Chapters 3, 4, 5 e 6. Financial instruments such as stocks, bonds, investment funds, derivatives (swaps, options, CDF, CDS) and exchange market are dressed. Topics such as risk and portfolio evaluation are developed to meet objectives 7 and 8.
Main literature
Richard Brealey, Stewart Myers, Franklin Allen and Alex Edmans;Principles of Corporate Finance, McGraw-Hill, 2023. ISBN: 9781266030475 (14th Edition)
Frank Paiano;Introduction to Investments, Libretexts, 2023 (Free to download here https://biz.libretexts.org/Bookshelves/Finance/Introduction_to_Investments_(Paiano))
Supplementary Bibliography
Julie Dahlquist, Rainford Knight (senior contributors);Principles of Finance, Rice University, 2022. ISBN: 978-1-951693-54-1 (Free to download here https://openstax.org/details/books/principles-finance)
Stephen Ross, Randolph Westerfield, Jeffrey Jaffe and Bradford Jordan;Corporate Finance, McGraw-Hill, 2022. ISBN: 9781264112203 (13th Edition)
Frederic S Mishkin, Stanley Eakins;Financial Markets and Institutions, Pearson, 2023. ISBN: 9780138043681 (10th edition)
Learning Methods
The subject matter has an essentially practical character. However, there will be two types of classes: essentially theoretical classes, in which the aforementioned concepts and methodologies will be learned, and essentially practical classes, in which the resolution of practical cases will occupy most of the time, although attention will also be given to the various ways used by financial managers to solve the problems they meet. Computer media, such as Microsoft PowerPoint software, are used to present programmatic content, and Microsoft Excel is used for solving exercises. The continuous assessment includes: 1 practical case with several financial instruments to be evaluated (20% in the final grade) and 2 individual written tests with a weighting of 40% each in the final grade. Final evaluation: 1 test with a weight of 100%.
Assessment Components
Avaliação distribuída com exame final
Assessment Components
Description
Type
Time (hours)
Conclusion Date
Attendance (estimated)
Lessons
30
Projeto
Projectos
15
Evaluation
Teste/Exame
3
Study
41
Participação Presencial
3
Participação Presencial
15
Total:
107
Continuous Assessment
- 2 Written Tests: 40%+40% - Group Work: 20%
Individual or group work must be submitted via the E-Learning platform, according to the final dates defined in the course syllabus, using the Turnitin database.
Under the terms of the General Regulation:
1. The students' attendance in classes will be recorded and, if the number of absences per student exceeds 30% of the total number of lessons scheduled for each course unit, the student will be automatically transferred to the final evaluation (regular season). 2. In the written tests and other assessment elements mentioned in paragraph 2 of Art. 39 it is necessary to obtain a minimum grade of 7.5 (seven point five) points. 3. If the student misses a test or receives a grade lower than 7.5 points in the tests or in another assessment element mentioned in the previous number, the student will be automatically transferred to the final evaluation (regular season). 4. If the student misses or obtains less than 7.5 in the second written test, held in the same date of the final exam in the regular season, they may apply for further evaluation in the Appeal season. 5. All written academic work provided for in the assessment (reports, case studies, etc.) must be submitted to the Turnitin database, available on the ISAG E-Learning platform, with a similarity rate up to 30% acceptable.
Final Exam
Individual writing exam with the weighting of 100%.
Demonstration of the coherence between the teaching methodologies and the learning outcomes
In order to achieve the objectives described above, the classes include the presentation of theoretical contents where the Microsoft PowerPoint program is used. In the application of the contents taught, students are offered practical cases and exercises and in "PDF" format. For the resolution of some exercises will be used the program Microsoft Excel.