Page 16 - CAPE Financial Services Syllabus Macmillan_Neat
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UNIT 1
MODULE 1: INTRODUCTION TO FINANCIAL PRODUCTS AND SERVICES (cont’d)

SPECIFIC OBJECTIVES                            CONTENT
Students should be able to:
                                               Risk structure of interest rates.
                                               Teach students how to calculate interest rate
                                               based on the various risk premia:
                                               (a) default risk;
                                               (b) liquidity; and,
                                               (c) income tax considerations.

                                               Term structure of interest rates

                                               (a) Understanding and construction of the
                                                        Yield curve.

                                               (b) Theories explaining the yield curve:

                                               (i) expectation theory;

                                               (ii) segmented market theory;
                                                        and,

                                               (iii) liquidity preference theory.

15. *explain the various models for            Involve students in simple calculations related
         computing the price for common        to stock prices:
         stock and the theory of
         expectation and efficient market      (a) Computation of stock prices:
         hypothesis; and,

                                               (i) one-period valuation model;

                                               (ii) generalised                  dividend

                                               valuation model; and,

                                               (iii) Gordon Growth Model.

                                               (b) Rational expectations.

                                               (c) Efficient market hypothesis.

CXC A38/U2/16                              11
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