ACCFIN4010: Capital Markets and Portfolio Management (Solutions)

The aim of this course is to provide students with a thorough understanding of portfolio or fund management, as well as of the nature of financial markets and of the securities that are traded on them. The course emphasises the practical and theoretical aspects of the investment process. Concepts of risk, return, and pricing are central to developing this understanding. Various asset-pricing models and security analysis techniques will be applied to practical investment problems. International issues of diversification and fund management will be used to develop the aims of the course. The behavioural evidence regarding how investors and fund managers actually make decisions and the empirical consequences of these decisions are also explored.

At the end of this course, students should be able to:

• Explain the mechanisms of capital markets from the perspective of an individual investor and a financial institution. 
• Apply techniques of measuring risk and returns to evaluate different portfolios. Identify and discuss the different elements of portfolio management i.e. the concepts of risk and risk premium, international diversification and security analysis techniques.
• Apply pricing techniques to the various assets traded within the financial markets specifically equities and bonds. Appraise securities using fundamental analysis and technical analysis.
• Apply critical thinking in making investment decisions by relating those decisions to finance theory.
• Explain the term structure of interest rates, forecast forward interest rates, and evaluate bond management strategies.
• Identify and discuss the behaviour of individual investors and systematic trading biases, as well as the implications on the capital market efficiency.