MN0493 - Investments and Risk Management

The module is supported by a teaching and learning plan which outlines the formal sessions, workshops in IT lab, together with tutor-directed study and independent reading. The emphasis will be on you having high levels of engagement in understanding theory, collecting and analysing real world data and interpreting results related to portfolio of financial assets and techniques of managing financial risk.

You will access and analyse the data of the real-world financial markets through various online resources such as Bloomberg, Yahoo Finance, FT.com, Reuters, Morningstar to name a few. The module consists of areas wherein you will learn important models in finance such as the multi-factor asset-pricing models (Noble Prize was awarded in 2013 to Eugene Fama who introduced the three factor model) which are extremely useful in forecasting prices and market behaviours. You will also learn to price the value, yield and volatility of fixed income securities such as corporate bonds. In the IT lab workshop sessions, you will be provided numerical examples to learn and advance in these topics where you will be supported by qualified tutors.

The assessment requirements will engage you with a wide range of scholarly sources to evaluate your effectiveness and currency and subsequently communicate them in exam and assignment.

Your directed learning will centre upon a range of activities including pre-reading, preparation for interactive activities, practice in IT lab and use of the discussion board to learn and share knowledge.

Your independent learning will centre upon you identifying and pursuing areas of interest in relation to topics such as stocks and bonds valuation and by providing deeper/broader knowledge and understanding of the subject through a range of learning activities that will include extended reading, reflection, research, statistical calculations etc.

Critical reflection on knowledge, experience and practice underpins the learning and teaching philosophy that you will be exposed to along with the explicit development of competence.

In the IT lab workshops, you will be taught the skills that you would apply to construct and analyse portfolio made of financial assets such as stocks and bonds.

You will also have access to Northumbria University’s library and databases. Academic content and delivery will be enhanced through opportunity for guest practitioner expert input. In addition, there will be an induction programme to introduce you to the university and the course. You will also be assigned a personal tutor to provide pastoral support and guidance throughout the course. Additionally, you will be supported by Academic Skills Unit (ASK), the feedback process of summative and formative assessments. At the start of the module, you will also be provided the module teaching and learning plan which details the delivery structure and activities.

The eLP will house lecture and workshop materials relating to the module. Additionally, you will find recorded lecture videos after each class that would be uploaded in the eLP to support you in your independent study. Where available you will be provided individual login access to use Bloomberg. You will also be provided training and materials to learn operational commands of Bloomberg relating to portfolio construction, management and analysis of risk. Moreover, the use of Bloomberg is fully supported by a comprehensive range of materials which are housed on the eLP for your independent learning.

You will be provided with a wide-ranging electronic reading list that comprises of academic journal articles, web pages and youtube videos that showcase the application of various quantitative techniques presented in the module.

Besides a written exam for the assessment of derivatives part, the module assessment consists of management of portfolio composed of financial assets mainly stocks and bonds for which you will construct and regularly rebalance your portfolio for 10 week periods. You will log your portfolio and all changes made to ensure that you are an active participant in the learning process throughout the semester.

All modules at Northumbria include a range of reading materials that students are expected to engage with. Online reading lists (provided after enrolment) give you access to your reading material for your modules. The Library works in partnership with your module tutors to ensure you have access to the material that you need.

Knowledge & Understanding:
• To understand and critique derivatives as tool of hedging financial risk. [MLO1]
• To develop an understanding of the equity and fixed-income securities in terms of optimal investment strategies. [MLO2]
• To be able to appreciate the relevance of theory and application in global markets. [MLO3]


Intellectual / Professional skills & abilities:
• To be able to measure and hedge risk through application of financial derivatives and VaR. [MLO4]
• To be able to assess and evaluate performance of portfolio investments. [MLO5]

Personal Values Attributes (Global / Cultural awareness, Ethics, Curiosity) (PVA):

Formative assessment will take place through group work, assignment discussion and reflection, discussion board activity on the e-learning platform, case study activity, and theory/practice related discussions. Criteria will be provided to enable you to understand what is expected and how you will be assessed on your performance. You are required to demonstrate self-reflection and reflective practice where appropriate. Formative feedback will be provided throughout the module, particularly in relation to workshop tasks in IT lab sessions. You should, however be aware that formative feedback can, and will, occur in any communication with your academic tutors.

In summative assessment part, you will be assessed through IT lab based exam (2 hour duration, 40% weighting, MLOs 1 and 4) and through written coursework assignment (2,000 words, 60% weighting, MLOs 2, 3 and 5). Summative feedback mechanism will ensure that you obtain timely and adequate feedback on their works. In the case coursework, feedback will be provided in writing for each section of the questions answered.

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You will be working in a simulated environment similar to that of an investment manager in the industry. In light of economic conditions and your risk tolerance level, you will select a range of suitable equities and bonds for inclusion in your investment portfolio. At the end of teaching, you will be able to compare and make a final evaluation of your portfolio’s performance. You will also be able to present a detailed analysis of how your portfolio was constructed and managed and what was your gain/loss in terms of risk adjusted returns. As such you will be able to demonstrate the application of key theories and your understanding of the principles of valuation, yield and volatility. The module is also mapped with the CFA curriculum in relation to topics in investment and derivatives as such the module is helpful in preparing for CFA exams.