This module conveys the skills needed to independently use and critically judge the current theoretical financing literature. The main focus of this module is on the methodology of neoclassical oriented theory. After completing the module, the students will be able to model economic decision problems from a financial perspective, develop solutions to these problems and independently evaluate alternative problems. On completion of this module, the students will be able to use information about the prices of securities to reach appropriate decisions regarding financing and investments.  

The five seminally and internally consistent theories upon which modern finance is founded are: (1) utility theory, (2) state preference theory, (3) mean variance portfolio theory, (4) the capital asset pricing model (CAPM) and arbitrage pricing theory, (5) and option pricing theory. All of these concepts are thoroughly presented and discussed in this module.

Language: English

Total workload: 300

Module duration: One semester

Module frequency: Every spring semester

Prerequisites: None. However, basic knowledge of algebra, differential and integral calculus is strongly recommended. Furthermore, financial basic knowledge (discounting, deriving cashflows from annual audits) is also helpful. The students should also possess elementary knowledge of statistical methods.