Financial Markets and Operations

Instance: 2025/2026 - 1S

Cycles of Study/Courses

Last updated on 2025-06-03.

Fields changed: Calculation formula of final grade, Observações, Obtenção de frequência, Avaliação especial

Teaching language

Objectives

In this course, the aim is to provide students with advanced training from a theoretical standpoint while also familiarizing them with financial products, operations, and transaction modes as they actually occur in today's financial markets.

Thus, students will be equipped to develop their master's theses in this scientific area if they so desire, or to pursue professional activities in this field with added advantages that will ideally enhance their value in the job market.

More specifically, upon completion of the course unit, the student will be able to:

1. Distinguish between theoretical price and market price of financial assets.
2. Understand methods for determining the theoretical price of financial assets.
3. Recognize the types of informational efficiency in financial markets and how to test them.
4. Understand the contributions of behavioral finance to explaining decision-making processes in financial markets.
5. Become familiar with the process of asset securitization.

Learning outcomes and competences

In depth knowledge of the theory and practice of the financial markets.

Working method

Program

I -  Introduction to Financial Markets

1. 
   
   Brief characterization of the financial system
   
   


2. 
   
   General principle of financial asset valuation
   
   


3. 
   
   Example of stocks and bonds.
   
   

II - Pricing models

1. The single index model


2. The multiple index model


3. The CAPM and its extensions


4. The APT model

III - The Efficient market hypothesis

1. Concept of informational efficiency in the financial market


2. Tests of informational efficiency in the financial market


3. Empirical evidence


4. Consequences for the positioning of agents in relation to financial markets

IV - Behavioral Finance

1. Anomalies to the Efficient market hypothesis


2. Critiques of the assumption of agent rationality.


3. Limits to arbitrage.


4. Empirical evidence.


5. Consequences for the positioning of agents in financial markets.

V - Speculative bubbles

1. Characterization and empirical evidence.


2. Models of asset price bublbes
   


3. Empirical tests for the detection of speculative bubbles.

VI - The securitization of financial assets

1. Securitization and products.


2. The securitization Process.


3. Advantages and disadvantages of securitization.


4. Pricing of MBSs.

Mandatory literature

Teaching methods and learning activities

Theoretical exposition. Problem solving. Case studies.

Evaluation Type

Assessment Components

Amount of time allocated to each course unit

Eligibility for exams

Alternative 1 (distributed assessment): two tests that assess different parts of the curricular unit's program. The first test will take place during the semester, and the second test will take place on the date of the regular season exam.

To be eligible for continuous assessment, consisting of two tests, students must meet a minimum attendance rate of 75% for classes. Attendance is monitored in each class.

Attendance is not calculated based on the total number of classes taught throughout the semester, but rather separately for each part of the syllabus covered in the tests. That is, after the end of the classes covering the material assessed in the first test, the attendance count is reset to zero.

Alternative 2: final exam.

Calculation formula of final grade

Alternative 1 (distributed assessment): two test, each one with a a weight of 45%. 10% of the final grade rewards attendance and participation in class.

Alternative 2: Final exam.
The final grade is determined by the following formula:
Final grade = Max(90% * final exam grade + 10% * attendance and participation; final exam grade)

Examinations or Special Assignments

Special assessment (TE, DA, ...)

For students with official status exempting them from class attendance, and in cases where the minimum attendance requirement is not met, the final grade is calculated as follows:

Option 1: Two tests, each weighted at 50%.

Option 2: Final exam grade.

Classification improvement

Classification improvement is only possible by means of a final exam, and in accordance with the assessment regulations.

Observations