Financial Markets

Code:

1GE302

Acronym:

MF

Keywords
Classification	Keyword
OFICIAL	Management Studies

Instance: 2021/2022 - 1S

Active?	Yes
Responsible unit:	Management
Course/CS Responsible:	Bachelor in Business Administration

Cycles of Study/Courses

Acronym	No. of Students	Study Plan	Curricular Years	Credits UCN	Credits ECTS	Contact hours	Total Time
LGES	170	Bologna Syllabus since 2012	3	-	6	42	162

Teaching language

Portuguese and english
Obs.: Português e Inglês

Objectives

In this course we discuss some of the main financial decisions of a corporate manager. We also look at the theories and applications related with asset valuation. The course is also concerned with the characteristics and analysis of individual securities, as well as the theory and practice of optimal combining securities into portfolios. Finally we give attention to derivatives instruments and their valuation.

Learning outcomes and competences

At the end of the course, the student should be able to:
1) Conduct an economic and financial analysis of a firm by calculating the main financial ratios;
2) Identify the main financial markets and instruments and describe their main functions and characteristics;
3) Apply the principles of decision and financial evaluation to specific financial tasks;
4) Describe the theories underlying financial choices in terms of the risk / return binomial, and apply them to decision strategies.
5) Identify main derivatives and apply valuation models.

Working method

Presencial

Program

1. Financial Analysis of Firms
a) Rentability Measures
b) Investment and Funding
c) Activity and Productivity
d) Operacional and Financial Risk
e) Cash Flow Analysis
f) Market Ratios

2. Portfolio Management and Cost of Capital
a) Risk and Return (Historical and Expected)
b) Efficient Frontier and Capital Market Line
c) Market Model
d) CAPM (Capital Asset Pricing Model)
e) Arbitrage Pricing Model and FF Three-Factor Model
f) WACC (Weighted Average Cost of Capital)
g) Aplication to Non-Listed Firms

3. Bond Market
a) Basic Concepts
b) Types of Bonds
c) Bond Valuation
d) Yield to maturity
e) Accrued Interest
f) Duration and Convexity
g) Imunization

4. Equity Valuation
a) Dividend Discount Model
b) Discount Cash Flow Applied to FCFF (Free cash Flow to Firm)
c) Market multiples

5. Futures Market
a) Basic Concepts
b) Future Contracts and Market Functioning
c) Futures Valuation
d) Strategies with Futures

6. Options Market
a) Basic Concepts
b) P&L Profies and Options Value
c) Put-Call Parity
d) Options Valuation
[Binomial Model («Portfolio Replication» and Risco-Neutral Approach) and Black & Scholes Model]
e) Strategies with Options

Mandatory literature

David Hillier; Corporate finance. ISBN: 978-1-5268-4808-6
Elísio BRANDÃO ;Finanças, 5ª edição, Elísio BRANDÃO , 2008. ISBN: 972-95501-8-2
MADALENO; Mara; VIEIRA, Elisabete; LOBÃO, Júlio; ROCHA ARMADA, Manuel; Princípios de Finanças: Instrumentos Financeiros - Teoria e Prática, Edições Sílabo, 2019. ISBN: 978-972-618-749-3
Zvi Bodie; Essentials of Investments. ISBN: 978-007-126324-5 (Only necessary for the lessons taught in English)
Richard A. Brealey; Principles of corporate finance. ISBN: 978-0-07-131417-6 (Only necessary for the lessons taught in English)

Teaching methods and learning activities

Theoretical and practical lessons.

Evaluation Type

Distributed evaluation without final exam

Assessment Components

Designation	Weight (%)
Teste	80,00
Trabalho escrito	20,00
Total:	100,00

Amount of time allocated to each course unit

Designation	Time (hours)
Estudo autónomo	120,00
Frequência das aulas	42,00
Total:	162,00

Eligibility for exams

See the field "Calculation formula of final grade"

Calculation formula of final grade

The assessment in the course of Financial Markets follows the “Regulamento de Avaliação de Conhecimentos” (RAC) of FEP.UP and the following rules:

 1) Only two evaluation regimes are admitted: final exam or distributed evaluation.

 2) The final exam will only consist of a closed book written test. In this regime the student who obtain a grade equal or superior to 9.5 will be approved.

 3) The distributed evaluation comprises the following components:
i) two tests, each with a weighting of 40% on the final grade and
ii) a group assignment, presence and participation of students in classes, all weighting a total of 20% on the final grade. In order to be on the distributed evaluation regime the student will have to participate in all the components of the evaluation. The student cannot miss more than 25% of the classes of the course. In the assignment the group is expected to conduct an economic and financial analysis of a company. Each group will be comprised of 4 students enrolled on the same class. Students should send to the respective class teacher, by e-mail, the composition of the groups (names of the four students) as well as the name of the company to be studied. The final paper (Word and Excel files) should be e-mailed to the respective class teacher. The papers will be presented and defended orally at the end of the semester, on dates to be defined. The final grade will be equal to the weighted average of the grades obtained in each of the components. This average shall be calculated taking into account the classification of each component rounded to one decimal place. Through this regime will be approved the students that obtain a grade equal or superior to 9.5 and that have not got in any of the three elements of evaluation a grade inferior to 6.5.

 4) Distributed evaluation without a final exam can only be done by students who are enrolled for effective attendance in one of the classes of the course.

Classification improvement

In accordance with FEP's evaluation regulations.