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University of Greenwich Business School

By Roberto Howard,2014-07-20 23:20
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University of Greenwich Business School ...

University of Greenwich Business School

MSc Accounting and Finance Programmes

Financial Management

    University of Greenwich Business School

1. COURSE DETAILS

1.1 Aims

The aim of the course is to develop necessary skills and understanding needed to apply appropriate

    concepts, techniques and approaches for sound decision making in financial management:

    a) To enable students to analyse financial situations and offer solutions to financial management

    problems.

    b) To understand and apply theoretical concepts to a range of investment and financing decisions.

1.2 Learning Outcomes:

On completing this course students should be able to:

A. Knowledge and understanding of:

How shareholder wealth is created, and the role of financial management in this process.

Investment and valuation process and techniques.

Relationship between risk and return.

Investment and financing decision making process in relation to the role of capital markets

    and their efficiency.

How to value different sources of long term finance.

Alternative capital structure policies and dividend policies.

Financial Derivatives and their use in Corporate Finance.

B. Intellectual Skills:

To develop a framework and provide a set of analytical tools for financial decision making

    based on financial theory and the best industry practices. To evaluate the business decision

    making implications of financial management.

B1. Breadth of Outlook

Focus on a range of securities, industries and types of businesses. Fundamental financial

    theories, tools and techniques covered in the course can be utilised in any financial decision

    making in any business sector.

B2. Wisdom

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    The student will select and apply appropriate tools and use sound judgement in the application of financial decisions.

    Appreciate the merits and demerits of, as well as alternatives to, various analytical frameworks and techniques used for investment and financing decisions in business.

B3. Personal Effectiveness

    Calculate, analyse, interpret and communicate business problems and solutions from the financial perspective.

C. Subject Practical Skills:

Focusing on, and identifying options for improving, shareholders value.

Valuation of securities shares, bonds etc.

Valuation of businesses and projects.

Investment decision making alternative investment evaluation tools available.

Asses the role of capital markets in investment and financing decision making alternatives

    available, effect of market efficiency/inefficiency for financial decisions, practical implications for managers.

Framework for analysing and deciding on debt policy and dividend policy.

Use of derivatives for corporate risk management.

D. Transferable Skills

    Basic principles of finance covered on the course are the foundation for all other finance based courses on the programme. These are also very relevant and applicable to practical financial decisions making process in business situations and for quantifying merits of individual projects and/or business undertakings.

D1. Critical Thinking

    Critically assess merits and demerits of various financial theories and practical analytical tools and their use in particular business situations.

    Evaluate and quantify available alternatives for making investment, valuation and financing decisions.

D2. Information Management

    Access, evaluate, utilise and communicate accounting and financial data and information for investment and financing decision making problems.

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D3. Communication Skills

Deal with complex issues in systematic and critical way, make sound judgements in the absence

    of clear data and communicate analysis and solutions clearly to specialist and non-specialist

    audiences.

3.3 Learning and Teaching Activities:

    A mix of formal lectures and tutorials will be used to introduce students to the basic areas of

    knowledge and to demonstrate and practice techniques.

Knowledge and understanding of:

    Principles of Finance through formal lectures.

Intellectual Skills:

    Problem solving and class debates in addition to a research based coursework.

    Subject Practical Skills:

    Tutorials will be used to develop students’ practical and problem solving skills skills.

Transferable Skills

    Numerical and analytical skills.

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2. COURSE CONTENT:

    A The Role of Financial Management in Decision Making and First Principles of Finance Introduction to financial management; main function and role; corporate goals and wealth maximisation; agency theory; models of the firm; contemporary trends in global finance; opportunity cost of capital, time value of money and net present value rule.

B Market Efficiency

    The secondary capital market, its efficiency and consequences for valuation and financing decisions.

C Valuation and Bonds

    The time value of money, annuities and perpetuity; the yield curve, bond prices; interest rates; inflation and the effect on rates.

D Valuation of Equities and Businesses

    Shares as discounted stream of dividends, valuation of shares and companies, using Gordon Model and zero growth to capitalise dividends; discounted free cash flows; retention model; different bases for valuation.

E Portfolio Theory

    Risk and return, indifference curves and utility; standard deviation as a measure of risk, efficiency sets, risky and risk free assets; portfolio risk, systemic and unique risk; volatility; risk and diversification.

F The Growth Decision

    Market for corporate control; mergers and acquisitions; reasons and motives; pricing and benefits; the P:E argument, its use in valuation and validation.

G Derivatives and Option Pricing

    Major types of derivative instruments, their characteristics and application; introduction to options and option pricing, use of options for hedging and valuation.

H Capital Budgeting and Risk Analysis

    Portfolio analysis, capital and security market lines; the capital asset pricing model in decision making; beta values, risk levels and return of assets; financial risk and business risk; WACC and discount rates; restrictions and realism; equity and beta values.

I The Dividend Policy

    Relevance and irrelevancy arguments; clientele and signalling effects; practical considerations; home made dividend policy; contemporary research and current policies.

J The Capital Structure Decision and Gearing

    Alternative approaches to the decision; traditional, M&M (with and without taxes) and real word arguments; gearing levels; optimal capital structure and gearing decisions; debt policy, taxation and the costs of financial distress; the effect on cost of capital; keeping the gearing ration intact.

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3. ASSESSMENT DETAILS:

    Grading Learning Outcome Methods of WeigMiniWords Outline Details Mode hting mum Assessment Length

    Pass %

    Mark

    Closed Book 0-100% 50% 50% 2.5 A mix of written and A. Knowledge and Examination hours computational understanding questions with B. Intellectual Skills approximately equal C. Subject Practical Skills D. Transferable skills weight.

     A. Knowledge and Understanding Research Based 2,500 Critical analysis a B. Intellectual Skills 0-100% 35% 50% Coursework D. Transferable skills financial management 3,000 topic.

    words

    A. Knowledge and A mix of written and Understanding computational 0-100% 15% 50% B. Intellectual Skills Mid Term Test questions with C. Subject Practical Skills

     D. Transferable skills approximately equal

     weight.

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4. INDICATIVE TEXTS:

    N.B. please check for the latest editions of recommended textbooks. In addition, further

    reading of academic and professional journals’ articles is recommended and expected.

Bibliography - Core Reading:

Blake, D., Financial Market Analysis, McGraw Hill

Brealey, R. and S. Myers, Principles of Corporate Finance, McGraw Hill

    Coombs, H. M. and D.E. Jenkins, Public Sector Financial Management, International Thomson Press

    Cuthbertson, K., Quantitative Financial Economics: Stocks, Bonds and Foreign Exchange, John Wiley & Sons

    Demirag, I. and S. Goddard, Financial Management for International Business, McGraw Hill

    Emery D. R. and J. D. Finnerty, Corporate Financial Management, Prentice Hall

Hutchinson R., Corporate Finance, Stanley Thornes

Hull, J., Options, Futures and Other Derivatives, Prentice Hall

    Levy, J. and M. Sarnat, Capital Investment and Financial Decisions, Prentice Hall

Lumby, S., Investment Appraisal and Financing Decisions, Chapman and Hall

McMenamin, J., Financial Management: An Introduction, Routledge

McLaney, E. J., Business Finance: Theory and Practice, Pitman Publishing

    Moyer, R., J. McGuigan and W. Kretlow, Contemporary Financial Management, West Publishing

    Samuels, J. M., F. M. Wilkes and R. E. Brayshaw, Management of Company Finance, Chapman and Hall

Useful sources for assignment:

Journals & Newspapers

Journal of Finance

    Journal of Corporate Finance

    Journal of Banking and Finance

    Journal of Portfolio Management

    Financial Analysts Journal

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Financial Management

    Financial Times

    Economist

Electronic Databases in Library

Science Direct Athens Intranet (full text articles)

    Business Source Premier EBSCO (full text business journals)

    Emerald (full text international and business journals)

    Fame (financial information on UK companies)

    Lexis Nexis (Lexis Professional) (national /regional newspapers)

    UK GAAP (financial and accounting information)

    Hydra (financial information on stocks and shares)

General Financial Websites

    www.bloomberg.com (market news and statistics) www.gtnews.com (Global Treasury news) www.economist.com (Economist magazine) www.cfo.com (CFO magazine)

    www.ft.com (Financial Times)

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