FM255: Financial Markets and Portfolio Management

Financial markets are critical in the efficient creation of liquidity and capital formation. From the New York Stock Exchange to the London Stock Exchange, these institutions facilitate the flow of investment between investors and entrepreneurs, who trade different financial instruments including equities, bonds, currencies and derivatives.

On this in-depth course, you will study the theoretical and practical aspects of financial markets, and learn how modern financial markets work. Engaging with leading faculty and your peers, you will be introduced to modern investment portfolio management strategies covering topics such as diversification, asset allocation, portfolio optimisation, the relationship between risk and return, factor models and equity valuation. You will also tackle some of the fundamental issues that arise in investment management, such as market efficiency, behavioural biases of investors, and market liquidity.

Designed to give you a practical toolkit for the successful management of investment portfolios, you will apply the theory covered in the course using real-world examples and cutting-edge research.

Prerequisites: Introductory Finance (To the equivalent of FM250) and elementary quantitative methods.

Level: 200 level. Read more information on levels in our FAQs

Fees: Please see Fees and payments

Lectures: 36 hours

Classes: 18 hours

Assessment: Two examinations

Typical credit: 3-4 credits (US) 7.5 ECTS points (EU)

Please note: Assessment is optional but may be required for credit by your home institution. Your home institution will be able to advise how you can meet their credit requirements. For more information on exams and credit, read Teaching and assessment

This course is suitable if you would like an in-depth grounding in financial markets, and the theory and strategies needed to successfully manage an investment portfolio. The content is particularly applicable to industries such as asset management, trading and wealth management. If you are targeting a role within the financial services sector including fund management, hedge funds or private equity you should consider taking this course. 

• Understand both the mechanics and operations of financial markets
• Analyse the trading and evaluation of securities in equity and bond markets
• Articulate the distinction between risk and mispricing as the source of expected return
• Discuss the impact of behavioural biases of investors on the efficient performance of financial markets

The design of this course is guided by LSE faculty, as well as industry experts, who will share their experience and in-depth knowledge with you throughout the course.