Applied Financial Techniques 2 (Dealing Room)

• To enhance student understanding of the structure and working of the financial system and to develop knowledge about the issues surrounding recent developments in financial architecture.
• To build upon student understanding of the problems associated with making decisions about risk under conditions of uncertainty.  To explore the role of expectations in financial markets.
• To develop use of financial information systems. To develop the use of financial techniques and theories in decision-making. 

On completion of this module students should be able to:

Subject specific:

• Participate in simulated market conditions, taking and giving orders and reacting to news, order flow and changing expectations. 
• Demonstrate that they can apply particular ideas or skills learnt throughout the course to a contemporary financial issue. 
• Demonstrate correct use of appropriate financial information software. 
• Demonstrate the ability to build models that monitor and assess open positions. 

           
Cognitive:

• Demonstrate skills of problem solving, and to encourage a flexibility of thinking which will enable students to meet and adapt to new and unforeseen economic and business situations.
• Demonstrate appropriate communication skills, including the ability to present quantitative and qualitative information, together with analysis and commentary.

The Market:

• Market-making and exchanges,
• the structure of the financial system.

Efficient Markets:

• Efficient market theory in practice. 
• Empirical evidence. 
• Behavioural Finance, trading and technical analysis.

The anatomy of a trade:

• Market inefficiency, market expectations, leverage and control.

The Reuters 3000 Xtra system:

• Customisation, downloading spreadsheets and advanced techniques.

We will explore microstructure and behavioural ideas in a series of workshops.  These will centre around the market-making simulations that will extend to include advising customers about orders and executing those orders. 

There will also be a series of demonstrations of some of the more advanced features of the Reuters 3000 Xtra information system. 

Students will use these features together with knowledge acquired throughout the course to develop and present trading strategies.

Indicative Reading:

The latest editions of:

Francis, J. & Ibbotson, R., Investments, Pearson.
Levy, H. & Post, T., Investments, Pearson.
Mishkin, F.S. & Eakins, S.G., Financial Markets and Institutions, Pearson.
Shleifer, A., Inefficient Markets, Oxford.

Other resources:

Reuters 3000 Xtra financial information system

Risk Manager

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