BUD3 Finance 1: Financial Management

• Topics

  BUD3 Finance 1: Financial Management is taught in the third semester and contributes to the overall theme of understanding how managers make decisions and create value for the firm. BUD3 will focus on the goals of the firm, and the role that corporate managers play in achieving the firm's goals. Furthermore, we will examine how investors and managers make investment decisions and the different valuation methods used in these processes. The discussion will include the corporate governance, time value of money, investment criteria (NPV, IRR, etc.), capital budgeting, stock and bond valuation, and the risk-return tradeoff in the context project evaluation. BUD3 will be an important stepping stone for BUD4.

• Learning outcome

  Upon successful completion of, students will be able to:

  Knowledge

  • Understand the role of corporate governance in a firm's decision making process.
  • Demonstrate knowledge of the capital budgeting and investment selection process.
  • Understand how financial securities (stocks and bonds) are valued.
  • Understand the risk-return tradeoff firms and investors must consider when making investment decisions.

  Skills

  • Implement theories and models to analyze investments.
  • Calculate the expected returns from a project.
  • Value projects and investments to determine if an investment should be undertaken.
  • Make risk adjustments to forecasts to accurately reflect expected future cash flows.

  General competence

  • Communicate and understand the economic intuition behind a firm's decision making process.
  • Implement the models for real world applications.
  • Exchange views and experiences with other people with a background in the field of business, thereby contributing to good practice.

• Teaching

  The course will consist of lectures and problem solving activities. In each lecture the core topics will first be covered to provide the economics and intuition. Along side understanding the core topics, we will work through problems together during class to implement the skills being discussed.

• Compulsory Activity

  None.

• Assessment

  The exam will be completed individually at home following the final in class session. The exam must be answered in English. Students must have access to statistical software for completion of the exam. Three days will be given to complete the exam. On day 1 the exam will be assigned at 8:00 and on day 3 the submission of the exam will be required no later than 14:00.

• Grading Scale

  A-F.

• Computer tools

  Statistical software (i.e. Python, R, Stata, etc.) will be used throughout the course.

• Literature

  Berk, DeMarzo, and Harford. Fundamentals of Corporate Finance, Global Edition.