Fundamentals of Financial Management

Module description

Summary:

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.

Additional Information:

Internationalisation

Investment theory and corporate finance are international by nature and the principles taught can be applied in any country.

External Engagement

The module is linked with various professional bodies like CISI (Chartered Instituted of Securities and Investment) and CFAI (Chartered Financial Analysts Institute).

Employability

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.

Sustainability
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
Module code:	BEAM047
Module level:	M
Academic year:	2023/4
Module lecturers:	Dr Monika Tarsalewska - Lecturer
Module credit:	15
ECTS value:	7.5
Pre-requisites:	None
Co-requisites:	Non-requisites: Cannot be taken with BEAM072
Duration of module:	Duration (weeks) - term 1: 11

Module aims

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
finance.

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;

ILO: Discipline-specific skills

7. develop theoretical arguments based on analytical reasoning;
8. rigorously analyse problems in finance;
9. interpret financial data and problems in the light of established theories.

ILO: Personal and key skills

10. plan and manage their own study;
11. make appropriate use of learning resources;
12. 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
30	120	0

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

Formative assessment

Form of assessment	Size of the assessment (eg length / duration)	ILOs assessed	Feedback method
Problem Sets	10 hours	1-12	Interpretation and discussion of correct answers during seminars
Mock exam paper	2 hours	1-12	Suggested solutions
ELE quiz	40 minutes	1-7	Suggested solutions

Summative assessment (% of credit)

Coursework	Written exams	Practical exams
0	100	0

Details of summative assessment

Form of assessment	% of credit	Size of the assessment (eg length / duration)	ILOs assessed	Feedback method
Written examination	100	2 hours	1-12	Suggested solutions
	0
	0
	0
	0
	0

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
Written examination (100%)	Written examination (100%) (2 hours)	1-12	August Examination Period

Syllabus plan

Introduction
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

Recommended textbooks:
BDM - Berk and DeMarzo, 2020. Corporate Finance, 5th (global) edition, Harlow, Essex: Pearson Education Limited
https://encore.exeter.ac.uk/iii/encore/record/C__Rb4347575__SCorporate%20Finance__Orightresult__U__X7?lang=eng&suite=cobalt

Additional reading:
BMAE - Brealey, Myers, Allen, Edmans., 2022, Principles of corporate finance, 14th Edition, New York : McGraw-Hill Education
https://encore.exeter.ac.uk/iii/encore/record/C__Rb4840237?lang=eng

Module has an active ELE page?

Yes

Indicative learning resources - Web based and electronic resources

Given before each lecture and seminar via ELE

Indicative learning resources - Other resources

Provided via ELE

Origin date

17/07/2014

Last revision date

5/10/2022