Basics of Finance (MA)
 

Aims

The lecture gives an introduction to basic ideas and fundamental concepts of finance at a graduate level, i.e. based on microeconomic concepts and by using mathematical methods.

Organizational Issues

The lecture is held in every winter term, 2 hrs per week (4 ECTS).
It is held in English and all examinations are in English.

Registration for the lecture is not required but recommended in order to get access to the e-learning platform Moodle where material for the course is provided.

Please note that if you missed the registration for the lecture we do not register students in Moodle at a later point in time!

The lecture "Basics of Finance" is a compulsory course in the following programs:

  • Master's program in Banking and Finance
    • Core Program: Introductory Module
  • Master's program in Business Administration
    • Specialization Period: Minor "Banking and Finance"
  • Master's program in International Business Administration
    • Specialization in Business: Minor "Banking and Finance"
It is an elective course for the following programs:
  • Master's program in Economics
    • General Electives: Business Administration and Finance
    • Specialization B - Compulsory Module: Specialization - Finance
  • Master's program in Statistics
    • Free Electives

Bachelor students are not allowed ot take the exam except you hold a prior approval by the Directorate of Studies.

Prerequisites

Intermediate knowledge in finance and a good knowledge in microeconomics are an advantage (see preparatory readings below).
Given that financial assets are characterized as random variables, basic prior knowledge in statistics and probability theory as well as in calculus (in particular, methods of optimization under constraints such as the method of Lagrange) and linear algebra are needed.

We also need basic knowledge of expected utility theory. Students of the master's program in Banking & Finance acquire this knowledge in the VO Decisions under Uncertainty. Student's of the master's programs in Business Administration and International Business Administration, who haven't acquired knowledge in expected utility theory before are recommended to take the VO Decision and Game Theory (Entscheidungs- und Spieltheorie).

Topics

  • Introduction (what is finance, key ideas in finance)
  • Financial Systems
  • Financial Decisions and the Theory of Choice, Foundation of the Net-Present-Value Concept (Fisher Separation)
  • Some Cornerstones and Key Ideas of Modern Finance
  • Efficient Market Hypothesis
  • Law-of-One-Price Concept and No-Arbitrage Pricing
    Applications:
    • Modiglinai-Miller Proposition I
    • Option Pricing
    • Term Structure of Interest Rates and Forward Rates
  • Bond Pricing and Bond Price Volatility (Duration, Convexity)
  • Classic Portfolio Theory and CAPM

Expiring programs in Business Administration and International Business Administration

The compulsory course "Principles of Finance" for the KFKs "Corporate Finance" or "Financial Intermediation" or "Financial Markets" or "Financial Services" will not be offered any longer. Instead students can take the exams in "Basics of Finance" and "Decisions under Uncertainty".

Exams

Exams are offered at
  • the end of the winter term,
  • the beginning of the summer term,
  • during the summer term,
  • the end of the summer break
>> Examination dates

For the exam registration via u:space is required.
Please note that in case of non-attendance without serious reason you will be suspended for the next examination date!
See also the Satzung of the University of Vienna, §6 (5) of the part "Studienrecht", Mitteilungsblatt vom 03.12.2014 (in German).

Please care about meeting the deadlines for registration and deregistration.
There is no way for late registration!
Note that you receive a confirmation of your registration by email. (If this is not the case please check your registration.)
The registration period starts 4 weeks before the exam and ends 1 week before.


Examination topics are the topics listed above, in particular, topics which were discussed in the previous winter term.
See the syllabus of the lecture of the previous winter term (information for the lecture at my webpage: "Lehrveranstaltungen" of the previous semester or "LV früherer Semester").

Permitted materials for the exam:
No documents (neither notes nor formularies) are allowed. A simple, non-programmable calculator, which does not plot graphs is allowed.

Please note that mobile phones, smart watches etc. must be out of reach during the exam.

Consequences of cheating:
Cheating is considered as a violation of academic integrity. Cheating counts as an attempt for the course and is marked on the univerisity certificate (Sammelzeugnis).

(see also Vorgehensweise bei Erschleichung von Leistungen - document by the Studienpräses, only available in German)

Literature

Basic readings:
  • J. Berk, P. DeMarzo, Corporate Finance (4th ed), Pearson Education, Boston, 2017.
  • T. E. Copeland, J. F. Weston, K. Shastri, Financial Theory and Corporate Policy (4th ed), Pearson Education, 2014.
  • D. Ruppert, Statistics and Finance -- An Introduction, Springer, New York, 2004.
Basics in microeconomics:
  • H. R. Varian, Intermediate Microeconomics (9th ed.), W. W. Norton & Company, New York, 2014.
If you want to refresh knowledge in mathematics I recommend:
  • K. Binmore, J. Davies, Calculus: Concepts and Methods, Cambridge University Press, 2001.
  • A. C. Chiang, Fundamental Methods of Mathematical Economics (4th ed), McGraw-Hill, Inc., New York, 2005.

Additional literature will be on the lecture slides.