Principles of Finance

Module title	Principles of Finance
Module code	BEAM072
Academic year	2023/4
Credits	15
Module staff	Dr Yao Chen (Convenor)

Duration: Term	1	2	3
Duration: Weeks	11

Number students taking module (anticipated)	200

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.

Module aims - intentions of the module

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.

Intended Learning Outcomes (ILOs)

ILO: Module-specific skills

On successfully completing the module you will be able to...

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

On successfully completing the module you will be able to...

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

On successfully completing the module you will be able to...

11. plan and manage self-study;
12. make appropriate use of learning resources;
13. critically analyse problems arising in both academic and practical contexts.

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)

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching Activities	Guided independent study	Placement / study abroad
33	117	0

Details of learning activities and teaching methods

Category	Hours of study time	Description
Scheduled Learning and Teaching Activity	22	Lectures
Scheduled Learning and Teaching Activity	11	Seminars
Guided Independent Study	117	Reading, preparation for classes and assessments

Formative assessment

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
Mock exam	2 hours	1-13	Suggested solutions
ELE quiz	40 mins	1-7	Suggested solutions

Summative assessment (% of credit)

Coursework	Written exams	Practical exams
0	100	0

Details of summative assessment

Form of assessment	% of credit	Size of the assessment (eg length / duration)	ILOs assessed	Feedback method
Written examination	100	2 hours	1-13	Feedback and comments on ELE
	0
	0
	0
	0
	0

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
Final Written Examination (100%)	Written examination (100%) (2 hours)	1-13	August Reassessment Period

Indicative learning resources - Basic reading

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

Indicative learning resources - Web based and electronic resources

To be given during lectures

Indicative learning resources - Other resources

To be given during lectures

Key words search

Principles of Finance, Financial management; Portfolio theory; Asset pricing; Fixed income securities; Cost of capital; Capital budgeting; Efficient Markets

Credit value	15
Module ECTS	7.5
Module pre-requisites	None
Module co-requisites	None
NQF level (module)	7
Available as distance learning?	No
Origin date	19/09/2016
Last revision date	21/10/2021