To develop an understanding of the rapidly evolving and exciting theory of finance.
To evaluate how close the firms investment, financing and dividend decisions come to an objective of maximising shareholder wealth.
To familiarise with financial decision making.
To raise awareness of the environment in which financial decisions are made.
To provide training in the key issues of capital markets.
To understand the importance of risk management in financial markets.
Module learning outcomes
On completing the module students should be familiar with:
The time value of money, the notion of compound interest, the definition of the internal rate of return, the valuation of financial instruments and the perpetual growth model.
The four criteria that companies use to make investment decisions the net present value rule, the payback rule, the profitability index rule and the internal rate of return rule.
The distinct features of main financial instruments including debt, equity and financial derivatives.
The general principles of pricing and use of financial instruments.
The concepts of market efficiency, portfolio risk and diversification.
The characteristic line and the definitions of the equity risk premium.
Capital structure, taxes, default and agency problems.
Fundaments of option pricing.
% of module mark
Essay/coursework Mid-term computer-based test
University - closed examination Exam
Special assessment rules
% of module mark
University - closed examination Reassessment: Exam
The midterm test will contain both multiple choice questions and calculated questions. It will take place in the Spring term in a computer lab. Students will receive their marks in a week along with some feedback about common mistakes.
Berk and DeMarzo. (2011). Corporate finance. Pearson, Global Edition.