This module provides students with concepts and knowledge of the structure and function of financial systems. It also introduces students with techniques and tools of corporate financial management at firm level. Students need to learn various fundamental topics on value of money, investment appraisal, cost of capital; capital structure and firm valuation; working capital management and capital budgeting; dividend policy. Depending on contemporary debates some further advanced topics may be addressed as well.

• Discuss basic composition and functions of the financial system and explain the role of different financial institutions in the financial markets;
• Distinguish between equity and debt, and explain the nature and characteristics of financial securities;
• Apply the concept of time value of money in financial decision making;
• Use various investment appraisal methods to choose value enhancing projects;
• Apply capital management methods to analyse capital structure of a firm and capital budgeting under equity and/or debt financing;
• Evaluate different types of dividend policies and how these would affect firm values and performances;
• Interpret share repurchase and analyse its potential impact on firm decision making and values.

27 fifty-minute lectures. 5 fifty-minute tutorial classes. Some handouts will be provided in hard copy or via Learning Central, but students will also be expected to take notes of lectures.

Students are also expected to undertake at least 50 hours private study including preparation of worked solutions for tutorial classes.

Skills:

An ability to establish the generic picture of the infrastructure of general financial markets and firm structure; skills to apply investment appraisal methods to select effective projects and valuation methods to evaluate firm value and budgeting; and understanding of how firms implement dividend pay-out and share repurchase.

Transferable Skills:

Communication skills

Reporting skills  

Decision making skills

Analytical skills

Numerical Skills
Problem solving skills

The office hours will be provided for students to be able to have individual Q & A sessions, which potentially would enhance or assist their studies. Five formative exercise sheets will be given during the teaching weeks to help students grasp the core contents of the course

The summative assessment is the written examination at the end of the module. This gives students the opportunity to demonstrate their overall achievement of learning outcomes.  It also allows them to give evidence of the higher levels of knowledge and understanding required for above average marks.

The examination paper has two sections of equal weight.  Section A contains a number of compulsory questions of variable length but normally short.  Section B has a choice of two from three equally weighted questions.

Introduction to Financial Systems

Classification and role of financial markets and institutions

Nature and characteristics of financial securities

Features of debt and equity financing as sources of funds

Time value of money and cost of capital

Investment decision – pay back method, net present value, internal rate of return method

Project risk analysis: Sensitivity and Scenario Analysis

Capital structure in perfect & imperfect markets and firm (levered/unlevered) valuation

Working capital and capital budgeting

Dividend policy

Pilbeam, K. 2018. Finance & Financial Markets (4th Edition). Palgrave MacMillan, 

Arnold, G. 2013. Essentials of Corporate Financial Management (2^nd Edition). Pearson.

Buckle, M., & Thompson, J. 2016. The UK Financial System (5^th Edition).  Manchester University Press