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FIN42000

Academic Year 2026/2027

Financial Theory (FIN42000)

Subject:
Finance
College:
Business
School:
Business
Level:
4 (Masters)
Credits:
5
Module Coordinator:
Professor Valerio Poti
Trimester:
Autumn
Mode of Delivery:
On Campus
Internship Module:
No
How will I be graded?
Letter grades

Curricular information is subject to change.

The course offers an in depth introduction to the theoretical foundations of modern financial economics, with a focus on both corporate finance (first one third of lectures) and portfolio theory and asset pricing (the remaining part) , along with how to apply these results in practice. The course will cover the central themes of modern investment finance including individual investment choice theory, equilibrium asset pricing, basic option pricing (time permitting) and the practical application of the methods corresponding to these areas. Upon completion of this course, students are expected to have a clear understanding of established thinking concerning individuals’ consumption and portfolio decisions under uncertainty and the implications of these for the valuation of securities, plus the ability to formulate and solve basic problems in financial decision making.

About this Module

Learning Outcomes:

Upon completion of this module, students should be able to:

Describe and apply fundamental principles and concepts in Investment Finance
Use key skills in financial decision making.
Contrast fundamental asset pricing theories and understand the crucial role of Information Sets
Critically assess financial theories and models of Investment
Appraise the tradeoff between risk and return.
Demonstrate research skills such as the use of computational optimisation tools and the understanding of published research, both practical and theoretical.
Recognise potential pitfalls of applying methods based on this theory too literally in real markets, both at the Agent level and the Regulation level.

Indicative Module Content:

Topic 1: An Introduction to Mean-Variance Portfolio Theory in Investments and
Computational Methods for Constrained Optimisation (in Julia), plus the CAPM
and APT.

Topic 2: Mean-Variance Portfolio Theory and introduction to 'absolute' (equilibrium) and 'relative' asset pricing (with an emphasis on the CAPM and APT).

Topic 3: Making Choices in Risky Situations
Utility Theory
Risk Aversion
Stochastic Dominance
State Preference Theory
Mean Variance Portfolio Theory (Revisited)

Topic 4: Equilibrium Pricing
Capital Asset Pricing Model (Revisited)
Arbitrage Pricing Theory (Revisited)

Topric 5: (time permitting, TBC)
Fundamentals of Derivatives Pricing

The United Nations identified seventeen Sustainable Development Goals (SDGs) as core to the 2030 Agenda for Sustainable Development, and UCD contributes in general to SDG 4 Quality Education. Further SDGs explored within this module if relevant are listed below. A scale of 1 - 5 indicates the extent to which the SDG is covered.


 

Student Effort Hours:
Student Effort Type Hours
Lectures

18
Tutorial

6
Specified Learning Activities

18
Autonomous Student Learning

68
Total

110

Approaches to Teaching and Learning:
Delivery will be in-class Lectures, plus in-class and (potentially online or pre-recorded) practical computing and problem-solving Tutorials. Additionally, students will submit both individual and group-based homework. With regard to lecture attendance, the course will be triple-delivered, with both sessions of lectures and tutorials covering the same material, and (except where announced, such as in-class quizzes) students may attend either lecture session. Attendance is mandatory, and roll may be taken during any session.

The module will rely heavily on students' learning. It should be emphasised that, while some coding can be expcted to demonstrate aspects and applications of financial theory, this is not a class in programming, so students will only be expected to achieve facility for a limited range of methods such as are required for the class (primarily, constrained optimisation).

Requirements, Exclusions and Recommendations

Not applicable to this module.


Module Requisites and Incompatibles
Not applicable to this module.
 

Assessment Strategy
Description Timing Component Scale Must Pass Component % of Final Grade In Module Component Repeat Offered
Exam (Online): A hybrid (online/written) in-Class Exam, enabling students to demonstrate their problem-solving expertise with and without Computing methods, as well as their grasp of higher-level methods and issues. Week 14 Alternative linear conversion grade scale 40% Yes
60
 Yes
Group Work Assignment: 3 Group Assignments relating to the class methods spread throughout the semester, where in each case, students must upload individually-completed drafts one-week prior to due dates to ensure credit Week 4, Week 8, Week 12 Alternative linear conversion grade scale 40% Yes
40
 Yes

Carry forward of passed components
Yes
 

Resit In Terminal Exam
Spring Yes - 2 Hour
Please see Student Jargon Buster for more information about remediation types and timing. 

Feedback Strategy/Strategies

• Group/class feedback, post-assessment

How will my Feedback be Delivered?

After each assessment the lecturer will provide group feedback to students.

Required Text:

For the corporate finance part: Principles of Corporate Finance by Brealey, Myers, Allen, and Edmans, McGraw Hill, 14th International Edition, 2022.

For the portfolio theory and asset pricing part: Investment Science, David G. Luenberger, Oxford University Press, any edition (e.g., the international one ISBN-13: 978-0195391060).

Other useful reference:
Financial Theory and Corporate Policy: Pearson New International Edition, 4/E, Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri, (CWS) (ISBN: 9781292021584)

Name Role
Mr Ankitkumar Kariya Lecturer / Co-Lecturer
Xiaomeng Wang Tutor
Martyn Zeman Tutor
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