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The Module explores the fundamental concepts in financial markets and the main asset pricing and valuation models used by the industry. We will go over the fundamental building blocks of company financial statements and individual asset valuation that set the base for the second term finance courses. At the end of the course, students will be equipped to be able to put together a financial projection for the business plan of their own fintech startup. The module will give the basic knowledge for the students to start a career in any investment banking area.

The Module focuses on the three largest asset classes traded in the financial markets: Interest rates, credit and securitization and equities, which are also referred to as Traditional Asset Classes. Together with Derivatives, which are cross-asset class instruments, these three provide most of the valuation tools used in the rest of the markets.

The Module is therefore divided in three main parts. Part 1 is dedicated to an overview of the central concepts in finance and understanding how to read and build a company’s financial statement. Part 2 is aimed at providing a thorough understanding of fixed income markets. We will cover the concepts and mathematics of calculating the time value of money as well as the two principal fixed income asset classes: interest rates and credit and securitized products. Finally, in Part 3 we will concentrate in equities valuation, the third traditional asset class. We will also introduce derivatives valuation and provide an overview of non-traditional asset classes. The pricing of these usually combines elements of the main models of the three main traditional asset classes that will have already learned.

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Learning Outcomes

• Understand the differences between the business models in Digital Finance
• Learn to build pricing and valuation models for the main asset classes: interest rates, credit and equities
• Develop their own tools for DCF company valuations, swaps pricing, bond pricing and index builder
• Understand all the non-traditional asset classes, e.g.: Emerging Markets, Private Equities and Commodities
• Critically evaluate alternative models for valuation of companies and assets
• Have a critical point of view on valuations of assets and firms performed by others
• Utilise creativity and lateral thinking to develop original or innovative and entrepreneurial solutions
• Present the financial part of a business plan for a start-up/fintech company in front of investors