Course title

Financial Management

Lecture type

Obligatory

ECTS

6

Lecturers and Associates

• PhD William G. Heninger, Lecturer
• Joseph Fitter, Instructor

The course aims

Introduce students to basic principles and concepts of financial management and train them to solve financial aspects of complex business issues.

Content

Lecture topics:
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.

Literature

Ross, Westerfield, Jaffe, Jordan (2015): Corporate Finance: 11th Edition. McGraw Hill Education.

Supplementary literature

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.