| Unit name | Economics of Financial Markets |
|---|---|
| Unit code | ECON30018 |
| Credit points | 20 |
| Level of study | H/6 |
| Teaching block(s) |
Teaching Block 2 (weeks 13 - 24) |
| Unit director | Professor. Hu |
| Open unit status | Not open |
| Units you must take before you take this one (pre-requisite units) | |
| Units you must take alongside this one (co-requisite units) |
None |
| Units you may not take alongside this one |
None |
| School/department | School of Economics |
| Faculty | Faculty of Social Sciences and Law |
Why is this unit important?
In standard asset pricing models (e.g. the CAPM) the trading mechanism, to be understood as the rules of market functioning, is not laid out explicitly, on the assumption that it does not matter for security prices. This unit focuses on the economic principles governing trading rules, which are at the origin of market liquidity, transaction costs, intraday price volatility, traders’ profits and market efficiency.
These concepts are at the basis of well-functioning of financial markets and are as important as the correct valuation of financial securities (which is the subject of units in corporate finance, investments and derivatives) in determining how market-based economies allocate their scarce resources.
How does this unit fit into your programme of study?
This unit is offered as an elective to several economic-related programmes. Taken in conjunction with other finance units, it will deepen your understanding of price formation and market efficiency. Taken on its own, it will give you a different perspective on how standard economic concepts such as asymmetric information, competition and risk aversion can impact welfare.
An overview of content
In this unit you will learn how trading mechanisms affect two key aspects of real-world markets: liquidity and price discovery. The former is the ability to trade large quantities quickly without moving the price. The latter is the speed and accuracy with which transaction prices incorporate the information available to market participants. These two aspects of financial markets are crucial to understand not only trading strategies, but corporate decisions as well.
We will focus on:
How will students, personally, be different as a result of the unit.
You will develop an understanding about the economic principles governing trading and the organisation of financial markets. You will gain confidence in reading the “markets” section of the Financial Times, as you will learn what both traders and regulators care and worry about. Overall, this unit will provide you with the theoretical underpinning to form well-reasoned opinions about how well financial markets are organised.
Learning Outcomes
Students will be able to
Teaching will be delivered through a combination of large and small group classes, supported by online resources.
Tasks which help you learn and prepare you for summative tasks (formative):
The exercises that are assigned each week are similar in spirit to the summative exam you will encounter at the end of the unit. The weekly tutorials are designed to get feedback from the tutors and your peers on your understanding of the material. Finally, during the weekly office hour slots, the lecturer and the tutors are available to answer all your questions about the material.
Tasks which count towards your unit mark (summative):
When assessment does not go to plan
As this is a final year unit, reassessment is not normally permitted. However, where it is permitted it will be an exam of the same format as the main exam.
If this unit has a Resource List, you will normally find a link to it in the Blackboard area for the unit. Sometimes there will be a separate link for each weekly topic.
If you are unable to access a list through Blackboard, you can also find it via the Resource Lists homepage. Search for the list by the unit name or code (e.g. ECON30018).
How much time the unit requires
Each credit equates to 10 hours of total student input. For example a 20 credit unit will take you 200 hours
of study to complete. Your total learning time is made up of contact time, directed learning tasks,
independent learning and assessment activity.
See the University Workload statement relating to this unit for more information.
Assessment
The assessment methods listed in this unit specification are designed to enable students to demonstrate the named learning outcomes (LOs). Where a disability prevents a student from undertaking a specific method of assessment, schools will make reasonable adjustments to support a student to demonstrate the LO by an alternative method or with additional resources.
The Board of Examiners will consider all cases where students have failed or not completed the assessments required for credit.
The Board considers each student's outcomes across all the units which contribute to each year's programme of study. For appropriate assessments, if you have self-certificated your absence, you will normally be required to complete it the next time it runs (for assessments at the end of TB1 and TB2 this is usually in the next re-assessment period).
The Board of Examiners will take into account any exceptional circumstances and operates
within the Regulations and Code of Practice for Taught Programmes.
