Module

Principles of Finance

Module description

Summary:

This module (Principles of Finance, BEAM072) 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 market hypothesis. If time permits, issues related to capital structure and dividend policy may be covered.

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 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 module aims 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 implications 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. describe the concept of the risk, return, the idea of diversification of risk and the return and the pricing of capital assets;
  • 5. describe the efficient markets hypothesis and its central role in investigating the working of financial markets;
  • 6. illustrate and discuss the efficient markets hypothesis and its central role in investigating the working of financial markets;
  • 7. understand 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 Learning and Teaching Activity22Lectures
Scheduled Learning and Teaching Activity11Seminars
Guided Independent Study117Reading, preparation for classes and assessments

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 hours1-13Feedback and comments on ELE

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

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
Mid-term written examination (20%) and final written examination (80%)Written exam (1.5 hours) 100%1-13August Reassessment 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

To be given during lectures

Indicative learning resources - Other resources

To be given during lectures

Origin date

19/09/2016

Last revision date

14/09/2020