GRA 6025 Financial Management
GRA 6025 Financial Management
The finance discipline has over the last decades matured to the point where there exists a sound body of theory. In this introductory course, the theory of finance will be illustrated and applied to problems in corporate finance.
Learning to cope with routine problems is easy, for instance by developing a list of rules for dealing with such problems. However, full reliance on the list-of-rules approach is insufficient as problems that do not fit these rules will be encountered. A thorough understanding of financial theory will facilitate transcending the simple rules.
The course focuses on the understanding of the way information is conveyed between companies and investors, of the main sources of value creation within firms, of the importance of competition and incentives.
By the end of the course, students should have become familiar with corporate financial statements, the time value of money, the determinants of interest rates, the term structure of interest rates, basic bond and stock valuation, capital budgeting, capital structure, payout policy, and basic valuation of companies and projects including the effects of leverage. They should also have a grasp of the impact of recent developments in nonfinancial reporting and the drive towards increased sustainability on firm value.
There is a special emphasis on the quantitative skills required to measure the value created by companies in an economy. The focus is on the following key skills:
- using financial statements, and understanding the links between them;
- understanding the time value of money and the correct use of discounting and compounding;
- producing cash flow projections;
- making investment decisions based on standard investment decision rules;
- using the term structure of interest rates to price fixed-income securities;
- evaluating the effect of different capital structure and payout policies on firm value;
- basic project and company valuation.
Students will have the opportunity to practice these skills through examples and exercises, both in class and as homework assignments.
Understanding the sources of value in a company is a key issue throughout the course. Students are encouraged to reflect on the main factors that influence the value of the firm, the impact of financial market competition, financial market frictions, and sustainability concerns on firm value, and the link between the firms' product markets and their financing.
- Finance- An Introduction
- Company types
- Accounting Statements and Cash Flows
- Value and Capital Budgeting
- Net Present Value
- Valuation of Bonds and Stocks
- Alternative Investments Rules
- Capital Budgeting
- Uncertainty
- Capital Market Theory
- Risk and return
- The Capital Asset Pricing Model
- Risk, Return and Capital Budgeting
- Capital Structure and PayoutPolicy
- Overview of Capital Structure Theories
- Payout Policy
- Introduction to valuation
The instruction consists primarily of presentations and discussions of the readings, exercises and other materials assigned to the topics listed above. Additional practice exercises (including video recordings) will be made available to students. Students are expected to have read/viewed the material before each class meeting.
Please note that while attendance is not compulsory in all courses, it is the student’s own responsibility to obtain any information provided in class.
All parts of the assessment must be passed in order to get a grade in the course.
The examination for this course has been changed from autumn 2023. It is not possible to resit the old version of the examination.
All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have specific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
| Assessments |
|---|
Exam category: Submission Form of assessment: Written submission Weight: 30 Grouping: Individual Duration: 1 Semester(s) Comment: Assignment Exam code: GRA 60252 Grading scale: ECTS Resit: Examination when next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 70 Grouping: Individual Support materials:
Duration: 3 Hour(s) Comment: Final written examination under supervision Exam code: GRA 60253 Grading scale: ECTS Resit: Examination when next scheduled course |
All exams must be passed to get a grade in this course.
| Activity | Duration | Comment |
|---|---|---|
Teaching | 24 Hour(s) | |
Digital resources | 28 Hour(s) | |
Feedback activities and counselling | 8 Hour(s) | |
Student's own work with learning resources | 100 Hour(s) | Incl. work on submission and exam |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.