BØK 1121 Finance I

BØK 1121 Finance I

Course code: 
BØK 1121
Department: 
Finance
Credits: 
7.5
Course coordinator: 
Knut Sagmo
Product category: 
Bachelor
Portfolio: 
Bachelor - Core Courses
Semester: 
2021 Spring
Active status: 
Active
Teaching language: 
Norwegian
Course type: 
One semester
Introduction

This introductory course aims at providing basic skills in applying financial mathematics and analysis of profitability related to firms' real investments. The analysis assumes understanding of risk and how it needs to be taken into account when the appropriate rate of return on invested capital is determined. As such the course also gives an introduction to capital market theory since rates of return are derived based on the notion that they represent an opportunuty cost in well-functioning markets.

Learning outcomes - Knowledge

Upon completing the course, it is expected from students that they:

  • Understand how financial mathematics (application of different discounting models) facilitates correct estimation of the time value of money.
  • Understand how different models used to analyse profitability (net present value, internal rate of return, payback) enables estimation of the expected return on real investments.
  • Understand how portfolio theory and diversification among investments helps identify relevant (systematic) and irrelevant (unsystematic) risk.
  • Understand why the capital asset pricing model (CAPM) results in required rates of return taking into account only relevant risk for investors in well-functioning markets.
Learning outcomes - Skills

Having completed this course, it is expected that students know how to:

  • To apply financial mathematics (discounting models) in order to correctly calculate time value of money.
  • To apply different models of profitability (net present value, internal rate of return, payback) in order to estimate real investments expected return.
  • Apply portfolio theory and the notion of diversification to distinguish between relevant (systematic) and irrelevant (unsystematic) risk for investors.
  • Applying the Capital Asset Pricing Model (CAPM) in order to calculate expected (required) rates of return taking into account, and including, only investors' exposure to relevant (systematic) risk in well-functioning markets.
General Competence

A main focus of the course is understanding the assumptions upon which the different models of profiability are based. Successful application requires comprehension of the models' limitations in practical use.

Course content
  • Introduction: Brief overview of main topics
  • Financial mathematics
  • Models of profitability and decison criteria applied when applying the net present value principle, the internal rate of return and payback models.
  • Portfolio diversification and estimation of relevant risk.
  • Capital asset pricing model to estimate the risk-adjusted, required rate of return.
Teaching and learning activities

There are 13 sessions in 3 hours (39 hours). In addition, 2 sessions of 3 hours (6 hours) come with a review of previous exam questions. A total of 45 lectures are given in the course.

In order to help stimulate an active and inspiring learning environment, two-way communication with students is attempted. It is students' responsibility to regularly participate during lectures with questions and comments. The lecturer may ask students to answer problems raised in class.

Students are expected to attend seminar groups to ensure that the learning process is continuous. In this way, a deeper understanding of the subject is achieved. Seminar groups led by experienced students are offered throughout the semester on specified dates.

Use of excel software is applied to selected assignment topics during the semester.

Software tools
Software defined under the section "Teaching and learning activities".
Qualifications

Higher Education Entrance Qualification.

Required prerequisite knowledge

Basic-courses in mathematics and statistics given during the first year of the programme.

Exam categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
BØK11211
Grading scale:
ECTS
Grading rules:
Internal and external examiner
Resit:
Examination every semester
100Yes3 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
  • Interest table
Individual
Exams:
Exam category:Submission
Form of assessment:Written submission
Weight:100
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
  • Interest table
Duration:3 Hour(s)
Comment:
Exam code: BØK11211
Grading scale:ECTS
Resit:Examination every semester
Type of Assessment: 
Ordinary examination
Total weight: 
100
Student workload
ActivityDurationComment
Teaching on Campus
39 Hour(s)
13 lectures of three hours duration.
Feedback activities and counselling
6 Hour(s)
2 sessions of 3 hours (6 hours) come with a review of previous exam questions.
Prepare for teaching
25 Hour(s)
One and a half to two hours of preparation prioer to attending class.
Seminar groups
127 Hour(s)
Work on 10 weekly designated exercise sets and presence during the announced plenary sessions. Exercise sets are distributed prior to each lecture (class meet).
Examination
3 Hour(s)
Sum workload: 
200

A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.