Module Information
Module Identifier
MMM7620
Module Title
INVESTMENTS, CORPORATE FINANCE AND FINANCIAL MARKETS
Academic Year
2012/2013
Co-ordinator
Semester
Semester 2
Other Staff
Course Delivery
| Delivery Type | Delivery length / details |
|---|---|
| Lecture | 10 x 4 hours or 40 hours block taught |
| Seminars / Tutorials | 7 x 1 hours |
| Practical | 3 x 1 hours |
Assessment
| Assessment Type | Assessment length / details | Proportion |
|---|---|---|
| Semester Assessment | 3,000 word essay | 30% |
| Semester Exam | 3 Hours | 70% |
| Supplementary Assessment | Repeat failed elements or equivalent | 30% |
| Supplementary Exam | 3 Hours Repeat failed elements or equivalent | 70% |
Learning Outcomes
On successful completion of this module students should be able to:
List, describe, explain, compare and contrast different elements in:
• Finance context
• Investment analysis
• Corporate finance
• Financial markets, institutions and instruments
• Risk management and hedging
Interpret corporate financial and market-based information
Cite, explain, appropriately select and apply formulae/techniques to
• Asset valuation
• Investment analysis
• Corporate financing decisions
Integrate different forms of analysis in order to generate a well-reasoned and holistic assessment of an organization’s financial structure and market position
Content
1. Introductory topics
• Wealth objectives of investors and firms
• Agency theory and governance
• The estimation of appropriate discount rates for project appraisal
• Application of spreadsheet modeling for investment decisions
2. Portfolio theory
• Risk and return paradigm, dominance, mean-variance efficiency and diversification
• Markowitz frontier
• The risk free asset
• Capital market line
3. Asset pricing models
• Capital asset pricing model
• Systematic versus non-systematic risk; further diversification
• Security market line
• Fama-French 3-factor model
• Arbitrage pricing theory
4. Capital structure, dividends and leasing policy
• Pecking order theory
• Modigliani-Miller’s approach
• Impact of bankruptcy costs, and agency and signaling effects
• Traditional theory
• Dividend policy
• Leasing policy
5. Financial markets and institutions
• Major components of a financial system
• Market purposes and mechanisms
• Market institutions – roles and regulation
• Financial intermediation and transformations
• The market in corporate restructuring: mergers and acquisitions
• Risk and risk-bearing
• Market efficiency
6. Financial instruments
• Shares versus bonds
• Financial derivative instruments
7. Market behavior and anomalies
• Rational learning
• Herding
• Momentum versus value
• Response to corporate/market news
• Wealth objectives of investors and firms
• Agency theory and governance
• The estimation of appropriate discount rates for project appraisal
• Application of spreadsheet modeling for investment decisions
2. Portfolio theory
• Risk and return paradigm, dominance, mean-variance efficiency and diversification
• Markowitz frontier
• The risk free asset
• Capital market line
3. Asset pricing models
• Capital asset pricing model
• Systematic versus non-systematic risk; further diversification
• Security market line
• Fama-French 3-factor model
• Arbitrage pricing theory
4. Capital structure, dividends and leasing policy
• Pecking order theory
• Modigliani-Miller’s approach
• Impact of bankruptcy costs, and agency and signaling effects
• Traditional theory
• Dividend policy
• Leasing policy
5. Financial markets and institutions
• Major components of a financial system
• Market purposes and mechanisms
• Market institutions – roles and regulation
• Financial intermediation and transformations
• The market in corporate restructuring: mergers and acquisitions
• Risk and risk-bearing
• Market efficiency
6. Financial instruments
• Shares versus bonds
• Financial derivative instruments
7. Market behavior and anomalies
• Rational learning
• Herding
• Momentum versus value
• Response to corporate/market news
Brief description
This module aims to give students a well-informed, practical grasp of investment analysis and corporate finance; a sound understanding of financial markets; and the foundation to understand contemporary issues in finance. Albeit informed by theory, the module is focused on application and practice. It brings together key topics in: portfolio and asset pricing theories; capital structure, dividend and leasing policy; and financial markets, institutions and instruments.
The over-riding concern is that students should be able to speak the language of finance; be able to take an active and constructive part in discussions of or based on financial and market information; and be able to understand important elements of finance theory and their application in practice.
Underlying themes for the module are the need for interpretation as well as raw analysis; relating theory to practice; appreciation of uncertainty and risk; and creation of value.
The over-riding concern is that students should be able to speak the language of finance; be able to take an active and constructive part in discussions of or based on financial and market information; and be able to understand important elements of finance theory and their application in practice.
Underlying themes for the module are the need for interpretation as well as raw analysis; relating theory to practice; appreciation of uncertainty and risk; and creation of value.
Module Skills
| Skills Type | Skills details |
|---|---|
| Application of Number | • Develop an easy familiarity with numerical data sources and numerical data • Apply numerical data to problem solving with care and accuracy • Assess the reasonableness of and interpret numerical solutions • Support assertions/arguments with appropriately developed and presented numerical data |
| Communication | • Develop confidence in and clarity of oral communication via tutorial participation • Develop clarity and focus of written communication via: o project production o development of answers to self study questions • Develop and use appropriate subject-specific vocabulary in oral and written communication |
| Improving own Learning and Performance | • Identify and distil the key issues covered by lectures, tutorials and self study • Identify and use a range of learning resources • Investigate benefits of small group working on self study • Structure study to accommodate intensive learning |
| Information Technology | • Use a variety of electronic web- and library-based resources to review available information and retrieve pertinent information • Use various software packages for the production of the project report (text, numerical tables and analysis, graphics) • Use software to complete elements of the self study (e.g., spreadsheets for ease of tabulated numerical calculations, production of summary statistics, production of graphs, etc.) |
| Personal Development and Career planning | • Develop skills in investment and financial analysis and decision making which are essential to the aspiring general manager • Identify a variety of potential career routes within the financial and professional services sector |
| Problem solving | • Identify the precise problem to be solved • Assess which data are pertinent to the problem • Recognize that alternative solution methods might be available • Select and apply appropriate methods for solving the problem • Assess the reasonableness of problem solutions and interpret those solutions |
| Research skills | • Identify which information sources are available to: o facilitate module study (understanding, wider reading) o provide information to facilitate the analysis of financial structure and market position o provide raw input to the production of the project • Select the most pertinent information for retrieval • Retrieve information • Re-assess the pertinence and assess the credibility of retrieved information • Properly reference/attribute information sources |
| Subject Specific Skills | • Identify and use sources of financial information • Understand, analyze, interpret and synthesize between corporate and market-based financial information • Make well-based financial recommendations and decisions • Bring financial analysis and decision making skills to the service of the business – in strategizing, marketing, operating, etc. |
| Team work |
Notes
This module is at CQFW Level 7