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Financial Management

Financial Management

  • Class 40
  • Practice 0
  • Independent work 140
Total 180

Course title

Financial Management

Lecture type

Obligatory

ECTS

6

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.

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.


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.