Unit information: Principles of Finance in 2020/21

Unit name	Principles of Finance
Unit code	EFIM20044
Credit points	20
Level of study	I/5
Teaching block(s)	Teaching Block 1 (weeks 1 - 12)
Unit director	Professor. Acker
Open unit status	Not open
Pre-requisites	Mathematical and Statistical Methods (EFIM10008) or Mathematics for Economics (EFIM10023) plus Fundamentals of Accounting and Finance 1 (EFIM10005) or Introduction to Accounting (ACCG10052)
Co-requisites	None
School/department	School of Accounting and Finance - Business School
Faculty	Faculty of Social Sciences and Law

Description including Unit Aims

The course explores aspects of corporate finance, examining how companies interact with the financial markets and how decisions about internal and external financing affect the value and risk of corporate flows. The aim is to provide a well-rounded picture of decisions that company managers make, the effects of these decisions, and the information that should be used as a basis for these decisions.

The topics explored include:

Project appraisal using discounted cash flow in the presence of taxation and inflation.

How the discount rates used in net present value calculations are set: the impact of risk and, in particular, systematic risk in the context of portfolio theory/the Capital Asset Pricing Model.

Use of the dividend valuation model to infer discount rates; the weighted average cost of capital.

The Efficient Market Hypothesis and its implications for share prices.

Whether managers of a firm can affect its value by choice of capital structure or dividend policy, to include the theories of Modigliani and Miller.

Governance issues.

Internal risk management, including hedging with futures and options.

Sources of long-term funds.

Using the Adjusted Present Value technique to evaluate projects which require the raising of long-term funds, in particular including debt.

Intended Learning Outcomes

• To have an understanding of basic tools of analysis used in finance.
• To be aware of the main issues addressed in corporate finance and relevant aspects of asset pricing.
• To think logically and analytically, apply mathematical techniques to a variety of problems, and critically evaluate these techniques.
• To be able to explain theories and mathematical procedures in non-technical terms.

Teaching Information

Teaching will be delivered through a combination of synchronous and asynchronous sessions including lectures, tutorials, drop-in sessions, discussion boards and other online learning opportunities

Assessment Information

This unit will be assessed by 100% exam

Reading and References

Hillier, Ross, Westerfield and Jaffe, Corporate Finance, McGraw-Hill