FINN43415: Capital Market Development

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• To understand how developing a nation's capital market and optimally structuring its underlying securities can rejuvenate its financial architecture;
• To advance students understanding of capital markets products, their models and working mechanism;
• To explore, at an advanced level, stock screening and portfolio management processes especially under the tax heterogeneity of economic agents over their life cycle;
• To critically explore and examine compliance issues with various capital markets securities;
• To structure and price Asset Backed Securities including REITs and Green Bonds.

• Capital Markets Development, Trends and Rationale;
• Issues in Capital Markets;
• The range of financial instruments
• The Equity Premium and the Risk-Free Rate Puzzles;
• Increasing a portfolio efficiency by optimum asset location and asset allocation;
• The breakdown of the 'Two-Fund Separation Theorem' (and thus CAPM) under tax heterogeneity;
• An alternative CAPM of Robert Lucas;
• Ramification of the Efficient Market Hypothesis (EMH);
• Investing over the life-cycle;
• Structuring Financial Products;
• Securitization of Asset Backed Securities (ABS);
• Sustainable Financing;

Subject-specific Knowledge:

• On completion of this module, students should have:
• knowledge of how capital markets development increases economic efficiency;
• an advanced knowledge of the models and working mechanism of the products in capital markets;
• a critical appreciation of screening and indexing methods in portfolio management and the related compliancy issues over an economic agents life cycle;
• understand structuring of asset back securities and sustainable debt instruments.

Subject-specific Skills:

• the ability to recognise and analyse capital market products and their relevant models to improve financial resilience;
• the ability to use their understanding of capital market to analyse the working mechanism of different instruments;
• apply financial principles to create a unified framework for analyzing and navigating the diverse and dynamic landscape of capital markets;
• the ability to identify the compliancy issues arising in different capital market instruments.

Key Skills:

• Independent learning within a defined framework at an advanced level;
• Cognitive skills of critical thinking, analysis and synthesis;
• Diversity and culture of economic agents can impact on the financial architecture. For example, the unethical practice by investment bankers in the 1920s contributed to the severity of the 1929 crash and ultimately led to the Glass-Steagall Act segregating the two;
• Effective written communication skills;
• The ability to identify and use relevant data sources, including empirical and bibliographic sources.

• Lectures convey the subject-specific knowledge and provide students with an opportunity to learn new concepts and principles;
• Workshops enable students to consolidate, extend and apply this knowledge through exchanging views and ideas, thus developing their subject-specific skills and key skills;
• Summative assessment by an assignment will test students knowledge and understanding of the subject-matter and their use of critical judgment and problem-solving and analytical skills.

In lieu of a Formative Assessment, examples of previous assessments will be discussed during the review session in the final lecture.

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