MODULE CODE BEA3001 MODULE LEVEL 3 MODULE TITLE ...

MODULE CODE BEA3001 MODULE LEVEL 3
MODULE TITLE Financial Management
LECTURER(S) Prof Richard Jackson (coordinator, lecturer and tutor)
Mr Bill Peng (tutor)
Dr Chen Lim (lecturer and tutor)
CREDIT VALUE 30 credits ECTS VALUE 15
PRE-REQUISITES BEA2003 Management Accounting or equivalent
CO-REQUISITES None
DURATION OF MODULE Two semesters
TOTAL STUDENT STUDY TIME 300 hours, comprising:
- One two-hour lecture per week
- One one-hour tutorial example class per week
- One one-hour surgery session per week
- 212 hours of independent and group self study
AIMS
This module is designed to provide a thorough treatment, grounded in the academic literature and pertinent for
the practitioner, of the following:
- The key financial questions which are faced by the directors and managers of firms – (i) in which projects
should the firm invest?; (ii) how should this investment be financed?; and (iii) how should the financial
relationship with providers of finance be managed?
- The principal investment questions faced by individuals – (i) in which firms (or, more generally, which assets)
should the individual invest?; and (ii) how should an investment portfolio be constructed?
- Selected topics which are ancillary and complementary to the above
INTENDED LEARNING OUTCOMES
On successful completion of the module, students should be able to:
Subject Specific Skills:
ILO1: Describe, explain and illustrate:
The generic approach to asset and project valuation
The risk-return paradigm for investment analysis and portfolio theory
The capital asset pricing model and arbitrage pricing
The techniques of risk management
Agency theory and signalling theory
The capital structure debate
The dividend policy debate
The leasing policy question
The supposed benefits of mergers and acquisitions, and the difficulty in achieving these benefits
The technique of balance sheet immunisation
ILO2: List, describe, explain, illustrate, compare and contrast:
Alternative corporate-level objectives
Alternative capital project appraisal techniques
Alternative approaches to working capital management
Capital asset pricing model and arbitrage pricing theory
Different forms of market efficiency
Different forms of derivative instrument
Alternative approaches to options pricing
Different types of real option
Different sources of financing
Alternative approaches to capital structure theory
Alternative insolvency processes
Alternative approaches to dividend theory
Alternative approaches to corporate valuation
ILO3: Cite, explain, select and apply appropriate theory and models to solve questions and numerical problems
in:
Capital project appraisal

Working capital management
Portfolio theory
Asset pricing
Market efficiency
Options pricing
Cost of capital
Capital structure
Dividend policy
Corporate valuation
Lease evaluation
International aspects of financial management
Mergers and acquisitions
Balance sheet immunisation
ILO4: Derive, criticise and challenge theoretical models for:
Objective function of the firm
Present value
Working capital management
Portfolio theory
Complex covariance
Capital asset pricing
Value of an uncertain cash flow
Capital asset pricing
Option pricing via the Binomial method
Put-call parity
Value of the firm, cost of equity and weighted average cost of capital
Value-relevance of dividend policy
Balance sheet immunisation
ILO5: Relate key financial issues one to another, to associated theory, to ‘real world’ evidence, and to the
preferences and expectations of key stakeholders
Core Academic Skills:
ILO 6: (a) Develop powers of research in the academic literature and texts
(b) Apply and criticise finance models in a ‘real world’ context
(c) Develop powers of algebraic proof, derivation and criticism
Personal and Key Skills
ILO7: (a) Use information technology for information retrieval and numerical analysis
(b) Build team skills in debating discussion topics and producing team solutions to problems
(c) Build presentation skills in lecture / example class participation
LEARNING/TEACHING METHODS
Teaching and learning principally is organised into lectures, tutorial example classes and directed self-study. There
are also regular surgery sessions to clear up student difficulties as they arise. Students are encouraged to work
together in assimilating lecture material, preparing for tutorials and completing self-study assignments.
All students are expected to attend all lectures and tutorials and complete all assigned work; and to attend surgery
sessions as necessary. Much of the material will be covered by only one mode of delivery (lecture or tutorial or selfstudy).
All material is potentially assessible, howsoever delivered.
ASSIGNMENTS
(Not for direct, summative assessment – see below for such)
- Assigned work for each tutorial [ILOs 1, 2, 3, 4, 5, 6, 7]
- Individual / group self-study assignments over the course of the two semesters [ILOs 1, 2, 3, 4, 5, 6, 7]
ASSESSMENT
- Two one-hour in-class multiple-choice tests (the first accounting for 5% module marks and the second for 15%
module marks = 20% total) [ILO 3]

- One three-hour examination (accounting for 80% module marks) [ILOs 1, 2, 3, 4, 5]
Should a re-sit be required for this module, it will be by means of one three-hour examination accounting for 100%
module marks [ILOs 1, 2, 3, 4, 5]
SYLLABUS PLAN
1. Introductory topics
2. Capital budgeting under conditions of certainty
3. Working capital management
4. Portfolio theory, capital asset pricing
5. Capital budgeting under conditions of uncertainty
6. Efficient markets
7. Options pricing theory
8. Sources of finance, cost of capital
9. Capital structure
10. Dividend policy
11. Leasing
12. Mergers and acquisitions
13. Duration, convexity and balance sheet immunisation
14. International aspects of financial management
15. Aspects of risk and corporate valuation
16. Review session
INDICATIVE BASIC READING LIST
The module recommended purchase text(s) (from which a number of the self-study assignments will be drawn) is:
Brealey, R.A., Myers, S.C. and Allen, F. (2008), Principles of Corporate Finance, 9 th (International) Edition, McGraw-
Hill.
For wider reading, there are a large number of texts upon the subject areas of this module. Titles such as ‘Financial
Management’, ‘Finance’, ‘Corporate Finance’, ‘Investments’, ‘Investment Analysis’ and similar may be found in the
library and through any good book seller. Having the most up-to-date edition of such books is rarely important.
Other materials / sources which you are expected to access and use during the module will be apprised to you
during the module.
RHGJ September 2008