Centre for Financial & Management Studies (CeFiMS) - University of London

Postgraduate

Finance and Financial Law (MSc and Postgraduate Diploma)

Detailed Syllabus

Introduction to law and to finance [C238]
a) Introduction to law and legal method
Functions of law in society; Subject areas of law. Jurisdictions of the world and ‘legal families’. Contrast between English (common) law and civilian system. Sources of English law 1 - precedent in the English legal system. Sources of English law 2 - statutes and statutory interpretation. Sources of English law 3 - Law and Equity. Fundamentals of English contract law 1; Definition of a contract; The function of contract law. Fundamentals of English contract law 2; Freedom of contract: its advantages, limitations and limits. Fundamentals of English contract law 3; ‘Agreement’ and the objective method of contract. Fundamentals of English contract law 4; Offer and acceptance. Fundamentals of English contract law 5; Privity and consideration; interpretation of contracts. Fundamentals of English property law; Definition of property; categorisation of property; division of property; rights and obligations. Elements of tort law.

b) Introduction to finance
This part of the course aims to present the main ideas in mathematics that are used in financial analysis and covers the following topics:
Introduction to financial analysis; Functions and graphs; Solving equations; Exponential and natural logarithms, rates of growth; Arithmetic and geometric series; Index numbers; Differential calculus; Unconstrained optimisation; Partial differentiation and constrained optimisation; Introduction to probability theory; Mean and variance; Correlation and covariance coefficients; Applications to financial analysis.

Corporate finance [C221]
Frameworks: Modigliani-Miller and agency cost approaches. Financing investment projects. Principles of leverage, returns and risk. Optimal capital structure, taxes, and bankruptcy costs. Dividend policy and choice of internal/external financing ratio. Debt financing and optimal contracts. Mergers and acquisitions policy. Single index and multi-index asset pricing models in securities markets. The capital asset pricing model. The arbitrage pricing theory. Efficiency of capital markets.

Financial law [C240]
Principles of English commercial law. Financial law in the context of English commercial contract law. English contractual documentation (comparison with civilian jurisdictions). Risk management role of English commercial law and contractual documentation. Warranties (including financial warranties). Concepts of money and payment. Instruments. The legal basis of derivatives. Currency and interest rate swaps. Futures and options. The legal structure of futures markets transactions. The banker-customer relationship. The current account. Interest bearing accounts. Netting. Secured Financing. Classification and characteristics of credit and security. Creation, enforcement and transfer of security rights. Principles of perfection and priorities. The floating charge. Conditional sales and hire purchase. The finance lease. Assignment. Financing against stock and receivables. Security over book debts. Bank balances as security. Guarantees. Asset-based finance. Securitisation.

Risk management: principles and applications [C223]  
Portfolio optimisation: risk and return in securities markets. Principles of arbitrage and hedging. Hedging with options and futures. Pricing of options contracts and futures. Warrants, convertibles and swaps. Risk management using options and futures. Real options. Managing market risk. VAR techniques. Credit risk: credit ratings, creditmetrics.

Legal aspects of international finance [C241]
Core topics: Conflict of law issues/legal opinions. Secured and unsecured transactions in international financing. International syndicated loans. International bond issues. Possible Additional
Topics: Project finance. Loan sales and transfers. Securitisation. Sovereign debt rescheduling. Eurocommercial paper. Medium Term Notes. Global Depository Receipts.

Bank financial management [C222]
This course concentrates on the principles of bank management of assets and liabilities. It teaches the principles of bank balance sheet management and money market operations, liquidity
ratios, and capital adequacy ratios. The course also covers issues of bank supervision and regulation. It examines the role and importance of bank financial management to the modern bank,
and teaches the basic models of financial management taught by University Economics Departments and Business Schools, which were constructed from the experience of mature capitalist economies. The course also discusses the various trends shaping banking markets, such as institutionalisation, securitisation,
globalisation and concentration.
Unit 1 The banking sector
Unit 2 Concepts of the banking firm
Unit 3 Bank valuation
Unit 4 Liquidity management
Unit 5 Interest rate risk management
Unit 6 Cost of funds and the funding of operations
Unit 7 Credit risk analysis and management
Unit 8 Capital management

Law and regulation of electronic finance and internet banking[C245]
In taking this course students will gain a grounding in the legal and regulatory issues concerning electronic banking and finance in different jurisdictions, including in the UK and at EU level. Students will also acquire an understanding of the impact that this has on financial services in general and their transactional and contractual aspects in particular.

Finance in the global market [C242]
Financing the global firm: multinational cost of capital and capital structure; sourcing debt and equity globally. Measuring and managing foreign exchange exposure. Foreign investment decisions. Corporate strategy and foreign direct investment. Foreign ventures. International portfolio investment. Multinational capital budgeting. International acquisitions and valuation. Country risk analysis. Multinational taxation. Legal aspects of foreign direct investment and multinational corporations.

Regulation of international capital markets [C243]
International legal background to regulation (IMF, World Bank, EBRD, European Central Bank); regulation of international capital markets (UK, US, EU); regulation of stock markets; banking regulation and international coordination; corporate governance as regulation; legal principles in derivatives (market-based and OTC (especially the role of standard contracts, legal structure of futures markets, counterparty risk)) and their regulation (including legal problems of regulating hedge funds).

Corporate governance [C244]
Definitions of corporation; evolution of the corporate structure; corporate governance versus capital formation, corporate finance, and economic growth.
Theory of the firm: Complementary perspectives on ownership and governance of the firm. The firm as a collection of growth options; the firm as a nexus of contract – market contracting costs versus ownership costs; competition as a governance mechanism; adaptive efficiency and evolution of firm ownership and governance structures.
Corporate governance around the world: Corporate governance as systems; path dependence in the evolution of corporate ownership and governance; investor protection and corporate governance.
Corporate governance and paradigm shifts: Legal determinants of external finance; politics of financial development in the 20th Century; crisis and transition in corporate governance paradigms – the role of the Chancery Court of Delaware.
External disciplinary devices: Corporate governance and stock market listing; corporate governance and bankruptcy; corporate governance and merger and take-over.
Control and board composition: A brief history of Anglo-American Boards; today’s typical board; the legal frameworks on board duties; the board-management relationship; “independent” outside directors.
Control and CEO compensation: What do we want from the CEO? Executive compensation and stock options, shareholder concerns; CEO employment contracts; employee stock ownership plans.
International governance: the fall of Enron and Worldcom; the Asian financial crisis and governance in emerging markets.
Overview of corporate governance guidelines and codes of best practice in developing and transition economies.

Legal aspects of corporate finance [C239]
Incorporation, the corporate constitution and limited liability. Companies registration and corporate documents. Agency rules. The company as a legal actor. Groups. The nationality and multinationality of corporations. Financial structure and membership. The concept of capital and the financing of companies. Share capital, capital maintenance, share dealings, distributions and alteration. Classes of shares and class rights. Legal incidents of membership. Debt capital, debentures and debenture stock. Dividends. The taxation of companies. Raising capital from the public. The Stock Exchange markets. Methods of marketing shares. Securities regulation and civil remedies. The regulation of takeovers and mergers. Corporate governance. The distribution of power within a company. Directors. Shareholder remedies. Public regulation by disclosure of information. Financial statements. Accounting. Investigations and inspections. Corporate collapse.