Principles of Finance

Module description

Summary:

Principles of Finance (was titled BEAM047A: Fundamentals of Financial Management during the previous 2 years). BEAM072 is essentially a re-named version of BEAM047A). It 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 selected areas of financial economics: asset pricing and corporate finance.  After introducing the concept of Time Value of Money we cover the valuation of bonds or fixed-income securities and equities.  The course then moves to portfolio theory and the capital asset pricing model. Finally, it turns to capital budgeting techniques and concludes with an overview of the efficient markets hypothesis. If time permits, issues related to capital structure and dividend policy may be covered. Its past main, mid-term examination papers and other material created for BEAM047A will be used by students for BEAM072 as well.

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 Institute of Securities and Investment) and CFA (Chartered Financial Analyst 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, use of calculators and spreadsheets, problem-solving, team-working, 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:Principles of Finance
Module code:BEAM072
Module level:M
Academic year:2020/1
Module lecturers:
  • Dr Yao Chen - Convenor
Module credit:15
ECTS value:

7.5

Pre-requisites:

None

Co-requisites:

None

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 principles 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 equities. 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 the principles of valuing bonds and bond portfolios
  • 4. Explain the concept of the risk, return, the idea of diversification of risk and the return and the pricing of capital assets
  • 5. Explain the rules about evaluating capital budgeting projects based on their expected cash flows and the cost of capital
  • 6. Explain and discuss the efficient markets hypothesis and its central role in investigating the working of financial markets
  • 7. Explain and discuss the role of capital structure and dividend policy (if time permits)

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 self 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 ActivitiesGuided independent studyPlacement / study abroad
331170

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Scheduled teaching and learning activities22Lectures
Scheduled teaching and learning activities11Seminars
Guided Independent Study117

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Seminar Problems3 hrs of independent study / 1 hr in-class discussion1-13Suggested solutions

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
01000

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
Mid-term written examination2040 minutes1-13Suggested solutions
Written Examination801.5 hours1-13Suggested solutions

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Mid-term and final written examWritten exam (1.5 hours) 100%1-13August examination period

Syllabus plan

  •  Introduction
  •  Time Value of Money and Valuation of Fixed income securities
  •  Equity Valuation
  •  Risk, Return and Portfolio Theory
  •  Capital Asset Pricing Models
  •  Capital budgeting
  •  The Efficient Markets Hypothesis
  •  Capital structure and Dividend policy (time permitting)

Indicative learning resources - Basic reading

Berk, J. and P. DeMarzo, 2014. Corporate Finance, 3rd (Global) edition, Harlow, Essex: Pearson Education Limited.

Module has an active ELE page?

Yes

Indicative learning resources - Web based and electronic resources

Given during lectures

Indicative learning resources - Other resources

Given during lectures

Origin date

19/09/2016

Last revision date

21/05/2020