Fundamentals of Financial Management
Fundamentals of Financial Management aims to convey to students the core concepts of modern finance and equip them with the basic tools underlying contemporary financial management. The course provides a solid foundation in both areas of financial economics: asset pricing and corporate finance. After introducing the notion of financial markets, the valuation of fixed-income securities, equities and derivatives is covered. The course covers portfolio theory and the capital asset pricing model is derived. On the corporate finance side, capital budgeting techniques, the role of risk therein and the concept of the opportunity cost of capital are thoroughly analysed. Furthermore, models and evidence on capital structure decisions, choices over debt and equity financing, as well as dividend policy are examined and discussed..
Additional Information: Internationalisation
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, 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 finance.
ILO: Module-specific skills
- 1. understand the concepts of risk and return in financial markets
- 2. analyse and use models of portfolio diversification and asset pricing
- 3. understand the principles of valuing fixed income securities and be able to assess their sensitivity to interest rate changes
- 4. understand the concept of the cost of capital and be able to 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. understand the factors that determine a corporation's capital structure policy
- 7. understand 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 teaching and learning activities||22||Lectures|
|Form of assessment||Size of the assessment (eg length / duration)||ILOs assessed||Feedback method|
|Seminar problems||3 hrs of independent study / 1 hr in-class discussion||1-13||Suggested solutions|
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|
|Mid-term written examination||20||0.5 hours||1-13||Suggested solutions|
|Written examination||80||1.5 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|
|Mid-term and final written exam||Written exam||1-13||August Examination Period|
- Fixed income securities
- Risk and return
- Asset pricing
- The cost of capital
- Capital budgeting
- Cash flow estimation and project risk analysis
- Capital structure policy
- Derivative instruments
Indicative learning resources - Basic reading
Berk, J. and P. DeMarzo, 2014. Corporate Finance, 3rd (global) edition, Harlow, Essex: Pearson Education Limited.
Brigham, E., and J. Houston, 2010, Fundamentals of Financial Management (Custom Edition). South Western Cengage Learning.
Module has an active ELE page?
Indicative learning resources - Web based and electronic resources
Given during lectures
Indicative learning resources - Other resources
Given during lectures
Last revision date