Foundations of Modern Finance II

This module introduces students to derivative securities, specifically forwards and futures contracts. Students will learn the fundamental principles of these contracts, including their structure, pricing models, and applications in risk management and speculation. The module examines the relationship between spot and futures prices, the concept of cost-of-carry, and arbitrage relationships that determine fair values. Students will understand how these instruments can be used by businesses and investors to manage price risk and implement various investment strategies.

This module covers the fundamentals of options contracts, including pricing models, strategies, and their role in portfolio management. Students learn about call and put options, option Greeks, and various trading strategies.

This module examines modern portfolio theory, including diversification principles, efficient frontier concepts, and risk-return relationships. Students learn how to construct and optimize investment portfolios.

This module explores the theoretical framework of CAPM, its assumptions, and practical applications. Students learn how to calculate expected returns, analyze systematic risk, and understand market equilibrium.

This module covers advanced capital budgeting techniques and the application of real options analysis in investment decisions. Students learn to evaluate projects using NPV, IRR, and real options methodology.

This module examines how firms make financing decisions and choose their capital structure. Students learn about the trade-offs between debt and equity financing, and the impact on firm value.

This module explores the relationship between investment decisions and financing choices. Students learn how financing decisions affect investment opportunities and overall firm value.

This module focuses on corporate payout policies and enterprise risk management. Students will learn how firms decide on dividend distributions and share repurchases, examining theories of payout including signaling, agency costs, and tax considerations. The module also covers corporate risk management strategies, including the use of derivatives for hedging financial risks such as currency, interest rate, and commodity price exposures. Students will understand the rationale for corporate risk management and how payout and hedging decisions can affect firm value and stakeholder interests.