Course Content

This intensive course is designed to deliver a greater understanding of asset markets and corporate finance.

Part 1: Asset-markets

This section offers a unified perspective of modern valuation methods in the context of three important asset classes – fixed income, stocks, and derivatives. The course will then proceed to fixed-income securities, before moving onto stocks, starting with basic notions of risk, return, diversification, and portfolio theory. Capital asset pricing model (CAPM) will be discussed, before examining whether the market values stocks efficiently, or whether there are “abnormal” returns leading to large profits. 

Part 2: Corporate Finance

These questions addressed in this part of the course can be divided in to two broad sets.

Decisions regarding how to spend funds on alternative investment projects (also known as capital budgeting). Here the course will describe the alternative techniques commonly employed to assess investment opportunities.

How to raise the funds necessary to finance those investments. Firms’ decisions over debt/equity ratios will be analysed here. This analysis will then be broadened to allow for the possibility that debt/equity choices may affect how firms are run. Incentives to adopt riskier strategies as a function of overall leverage will be considered, as will the debt overhang problem.

In general, the topics covered will include:

• Net Present Value technique
• Introduction to portfolio theory
• The Capital Asset Pricing Model (CAPM)
• Stock market efficiency
• Forward and futures contracts, option pricing
• Investment decisions and the significance of real options
• Capital structure and dividend decisions
• Capital restructuring: Initial Public Offerings 

Course Outcomes

Students will learn about the theory and application of Financial Securities and Corporate Finance. The course broadly covers financial instruments, such as equity and fixed income and derivative securities, as well as key concepts in Corporate Finance. It will also enhance a students understanding of how firms choose their capital structure, conflicts between shareholders and debt holders, pay-out policy, and initial public offerings.

World-class LSE faculty

The LSE’s Department of Finance has grown in recent years to become one of the largest and most highly-regarded finance groups in the UK and Europe. On this three week intensive programme, you will engage with and learn from full-time lecturers from the LSE’s finance faculty.