Principles of Finance
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.
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 Institute of Securities and Investment) and CFA (Chartered Financial Analyst 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, use of calculators and spreadsheets, 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:||Principles of Finance|
|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 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 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|
|Scheduled teaching and learning activities||11||Seminars|
|Guided Independent Study||117|
|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||40 minutes||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 (1.5 hours) 100%||1-13||August examination period|
- 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?
Indicative learning resources - Web based and electronic resources
Given during lectures
Indicative learning resources - Other resources
Given during lectures
Last revision date