Theoretical Foundations of Finance

Code:

2FI01

Acronym:

TFF

Keywords
Classification	Keyword
OFICIAL	Management Studies

Instance: 2015/2016 - 1S

Active?	Yes
Responsible unit:	Management
Course/CS Responsible:	Master in Finance

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
ME	8	Bologna Syllabus	1	-	7,5	56	202,5
		Syllabus - english track	1	-	7,5	56	202,5
MIF	56	Bologna Official Syllabus	1	-	7,5	56	202,5

Teaching language

English

Objectives

Given the nature of the course, this unit is mainly theoretical. Its program aims at deepening the study of the main issues of the Theory of Finance, through a critical approach to its major proposals and problems. 

The program does not envisage a presentation of the basics of the discipline, although it will not go without ensuring, as often as possible, a quick review of the basic concepts and models. 

Learning outcomes and competences

The main objective is to consolidate the knowledge of the students on Finance issues, and train them on a critical approach to those issues, so that they may later be able to undertake research work and, thus, questioning all certainties exhibited by a theoretical discipline which has been subject to a process of rapid development.

Working method

Presencial

Pre-requirements (prior knowledge) and co-requirements (common knowledge)

Students who are contacting the discipline for the first time are advised to begin by studying carefully a basic Finance text book, from the many available. The same can be said with respect to those who might have acquired their financial education too long ago and might need an updating. 

Program

1. Introduction

2. Portfolio Theory

3. Modigliani and Miller's Capital Structure Theory

4. Asset Pricing Theory

5. Options Theory
6. Efficiency of Financial Markets Theory

7. Agency Theory

8. Contract Theory

9. Financial Innovation and Markets Efficiency

10. Behavioural Finance

Mandatory literature

Copeland, Thomas E., J. Fred Weston e Kuldeep Shastri; Financial Theory and Corporate Policy, Pearson-Addison Wesley, 2005. ISBN: 0-321-12721-8

Complementary Bibliography

Bolton, Patrick e Mathias Dewatripont; Contract Theory, The MIT Press, 2005. ISBN: 0-262-02576-0
Tirole, Jean; The theory of corporate finance. ISBN: 978-0-691-12556-5

Teaching methods and learning activities

The presentation of the program is mainly theoretical. However, an effort is made to establish a relationship with reality, through the presentation of case studies and real world problems, in order to demonstrate the relevance and usefulness of all the concepts, formulations and models offered nowadays by the Theory of Finance. 

The direct participation of students in the classroom is encouraged. Moreover, the classes are organized into working groups, each one of which must submit an applied research work on a subject that will be proposed to them. 

Evaluation Type

Distributed evaluation with final exam

Assessment Components

Designation	Weight (%)
Exame	50,00
Trabalho escrito	50,00
Total:	100,00

Eligibility for exams

Students are evaluated taking into consideration their work in the form of theoretical or applied group assignments and their performance in a final exam.

Calculation formula of final grade

Students final marks will result from the weighted average of the marks assigned to the following factors: 

- Final exam: 50%;
- Group assignment: 50%;
- Class participation in lectures: a bonus of up to 1 mark may be added to the final grade for students with outstanding class participation.