Fundamentals of Financial Management
Fundamentals of Financial Management will take you through an appraisal of models and issues arising in the area of financial management. This module introduces you to finance theory and financial management. It covers techniques for capital budgeting, the role of risk in capital budgeting, and the cost of capital. It introduces the topic of financial markets, covering the notion of portfolio diversification leading to simple asset pricing models. It analyses models and evidence relating to a firm’s optimal capital structure and appropriate dividend policy.
Investment theory and corporate finance are international by nature and the principles taught can be applied in any country.
The module is linked with various professional bodies like CISI (Chartered Instituted of Securities and Investment) and CFAI (Chartered Financial Analysts Institute).
This module covers many different aspects of finance and prepares the students for employment in different financial sectors. Students acquire quantitative skills, analytical skills, experience using Excel, problem-solving, team-working, presentation, and communication skills.
The entire module is about the fair valuation of financial assets which is of interest to those involved in sustainability.
Access to sources of financial data and financial information, lectures and case study material is available for all students online.
Full module specification
|Module title:||Fundamentals of Financial Management|
|Duration of module:||
Duration (weeks) - term 1: |
The aim of the module is to introduce students to the subject of financial management. In particular the module provides students with a critical understanding of the basic concepts of risk and return in financial markets, and their implication for the financial decisions made by both investors and corporations, including portfolio construction, capital budgeting and the analysis of fixed income securities and derivatives. Through a combination of lectures and tutorial classes, students will be provided with a solid foundation in financial theory and practice, providing the necessary grounding for further modules in
ILO: Module-specific skills
- 1. explain the concepts of risk and return in financial markets;
- 2. analyse and use models of portfolio diversification and asset pricing;
- 3. explain and demonstrate the principles of valuing common stocks and bonds;
- 4. explain the concept of the cost of capital and estimate the cost of capital for a corporation;
- 5. evaluate the attractiveness of real investment projects based on their expected cash flows and the cost of capital;
- 6. explain and discuss the factors that determine a corporation's capital structure policy;
- 7. explain and demonstrate the principles of pricing forwards, futures and options.
ILO: Discipline-specific skills
- 8. develop theoretical arguments based on analytical reasoning;
- 9. rigorously analyse problems in finance;
- 10. interpret financial data and problems in the light of established theories.
ILO: Personal and key skills
- 11. plan and manage their own study;
- 12. make appropriate use of learning resources;
- 13. critically analyse problems arising in both academic and practical contexts.
Learning activities and teaching methods (given in hours of study time)
|Scheduled Learning and Teaching Activities||Guided independent study||Placement / study abroad|
Details of learning activities and teaching methods
|Category||Hours of study time||Description|
|Scheduled Learning & Teaching activities||20||Lectures|
|Scheduled Learning & Teaching activities||10||Seminars with assigned problem set|
|Guided Independent Study||120||Reading, preparation for classes and assessments|
|Form of assessment||Size of the assessment (eg length / duration)||ILOs assessed||Feedback method|
|Problem Sets||10 hours||1-13||Interpretation and discussion of correct answers during seminars|
Summative assessment (% of credit)
|Coursework||Written exams||Practical exams|
Details of summative assessment
|Form of assessment||% of credit||Size of the assessment (eg length / duration)||ILOs assessed||Feedback method|
|In class test||5||40 minutes||1-3||Suggested solutions|
|Written examination||95||2 hours||1-13||Suggested solutions|
Details of re-assessment (where required by referral or deferral)
|Original form of assessment||Form of re-assessment||ILOs re-assessed||Timescale for re-assessment|
|In-class test (5%) and Written examination (95%)||Written examination 2 hours (100%)||1-13||August Examination Period|
- Time value of money
- Valuing bonds and common stocks
- Risk, return, and the cost of capital
- Portfolio theory and asset pricing equilibrium
- Market efficiency
- Capital budgeting and the NPV rule
- Capital structure irrelevance – M&M theorem
- Capital Structure I
- Capital Structure II
Indicative learning resources - Basic reading
- Brealey, Myers, and Allen, 2017. Principles of Corporate Finance, 12th edition, Mcgraw-hill (henceforth, BMA) http://lib.exeter.ac.uk/record=b3769722~S6
- Berk and DeMarzo, 2017. Corporate Finance, 4th (global) edition, Harlow, Essex: Pearson Education Limited (henceforth, BDM) http://lib.exeter.ac.uk/record=b3946520~S6
Module has an active ELE page?
Indicative learning resources - Web based and electronic resources
Given before each lecture and seminar via ELE
Indicative learning resources - Other resources
Provided via ELE
Last revision date