- Class 40
- Practice 0
- Independent work 140
Lecturers and Associates
The course aims
Introduce students to basic principles and concepts of financial management and train them to solve financial aspects of complex business issues.
L1: Introduction to corporate environment.
L2: Financial statements and cash flow.
L3: Financial statement analysis and modeling.
L4: Time value of money (TVM) – future value.
L5: Time value of money (TVM) – current value.
L6: Discounted Cash Flows and other investment criteria to make financial decisions.
L7: Interest Rates and Risk.
L8: Bond Valuation.
L9: Stock Valuation.
L10: Capital Budgeting introduction.
L11: Capital Budgeting analysis.
L12: Capital Budgeting evaluation.
L13: Capital Asset Pricing Model (CAPM).
L14: Cost of Capital (WACC).
L15: Risk Measurement (Beta).
L16: Market Efficiency (EMH).
L17: Behavioral Finance challenges.
L18: Introduction to Options (Puts).
L19: Introduction to Options (Calls).
L20: Put-Call (PC) Parity Options.
Topics for seminar classes:
S1: Role and goals of financial managers in corporations.
S2: Cash flow analysis.
S3: Assessment of financial impact – analysis of financial ratios.
S4: Concept of future value and graphic representation of future value.
S5: Types of annuities. Future value of annuity. Present value of annuity.
S4: Present value of lump-sum payments.
S5: Present value of free cash flow and perpetual annuity.
S6: Evaluation of bonds.
S7: Coupon bonds and zero coupon bonds. Annuity bonds. Yields on bonds. Current yield. Yield to maturity. Yield to call.
S8: Risk aversion. Statistical methods of risk and return. Risk and return for portfolios.
S9: Effective risk portfolios. Risk-free loans and borrowings. Balance and market portfolio. Pricing model of capital assets evaluation. French model – Fama.
S10: Valuation of shares. Models for valuation of shares. Preferred valuation of shares.
S11: Zero growth. Continued growth. Variable growth. Valuation of companies. Other approaches to valuation of shares.
S12: Cost of capital and project risk. Choosing the right discount rate. Strategy and capital budgeting.
S13: Net present value (NPV).
S14: Advantages of IRR and problems with IRR.
S15: Profitability index. Calculation of profitability index. Profitability index and capital rationing.
S16: Cash flow and capital budgeting. Depreciation. Cash flow, discounting and inflation.
S17: Call options payments. Put options payments. Option portfolio payments. Put-call parity.
S18: Quantitative analysis of option pricing. Binominal model of option pricing.
S19: Market efficiency and behavioral finance. Empirical evidence of market efficiency.
S20: Empirical evidence of behavioral finance.
Ross, Westerfield, Jaffe, Jordan (2015): Corporate Finance: 11th Edition. McGraw Hill Education.
Brigham, E. F. and Ehrhardt, M. C. (2013): Financial Management: Theory and Practice. South-Western College Pub.
Brealey, R. A., Myers, S. C. and Marcus, A. J. (2011): Fundamentals of Corporate Finance.McGraw-Hill/Irwin.
Standard and Poor's Guide to Money and Investing (2005). McGraw-Hill.
Minimum learning outcomes
- Re-examine how financial markets allocate capital.
- Re-examine how financial experts use accounting data.
- Determine how capital markets are able to affect economy.
- Evaluate basics of time value of money and assess benefits and limitations of financial models.
- Compare different models of market efficiency analysis, its allocative, operational and informational forms.
- Argumentatively compare different characteristics of share options.
Preferred learning outcomes
- Conclude why allocation of capital is important for society.
- Evaluate, calculate and interpret financial ratios and understand the differences between accounting and financial profit.
- Determine present net value and explain what is being measured.
- Compare models of time value of money when solving problems and evaluate financial models.
- Argue opinion on market effectiveness and explain pros and cons of efficient market hypothesis.
- Determine payoff diagram for options and option portfolios.