FM473W      Half Unit
Financial Markets

This information is for the 2025/26 session.

Course Convenor

Availability

Requisites

Mutually exclusive courses:

This course cannot be taken with FM429 or FM431A or FM431W or FM473A at any time on the same degree programme.

Additional requisites:

The course assumes no previous knowledge of finance, economics, and statistics, and requires only basic knowledge of mathematics. However, the course is quantitative and students must be willing to learn and work with new concepts in mathematics and statistics. Course work will involve a significant amount of algebra and numerical exercises. Students should be comfortable with 'High School' level Mathematics and simple algebra, e.g., the ability to solve linear systems of two equations and two unknowns.

This course is a self-contained introduction to finance. The course explores the way that firms and the capital market function to channel savings toward productive investments. From the investor's perspective it considers characteristics of the major financial contracts and the principles used in their valuation. It considers how investors should select their portfolios and the implications of this behaviour for pricing assets in stock and bond markets. It explores the question of whether stock markets are efficient in reflecting investors’ information. It applies these insights to the firm's financial management decision of whether or not to invest in a risky project and how to select among alternative investments. In addition, the course also covers some core corporate finance questions, such as capital structure choices.

The course is also related to FM474 (Managerial Finance): both are introductory courses in Finance. FM473 focuses mostly on understanding the workings of financial markets, the determination of asset prices, and the decisions made by financial investors.  FM474 studies financial decisions from the perspective of firms (i.e., “Corporate Finance”). Although there is some small amount of overlap between FM473 and FM474, both courses can be taken simultaneously or sequentially, in any order.

30 hours of lectures in the Winter Term.

This course is taught in the interactive lecturing format. There is no distinction between lectures and classes/seminars; there are “sessions” only, and the pedagogical approach in each session is interactive.

There will be 10 three-hour sessions. Attendance is required.

This course is taught twice, in both Autumn and Winter Term. Students must either register for FM473A which is taught in Autumn Term, or FM473W which is taught in Winter Term.

Brealey, Myers, Allen, and Edmans, Principles of Corporate Finance.

Exam (100%), duration: 120 Minutes, reading time: 15 minutes in the Spring exam period