FUNDAMENTALS OF CORPORATE FINANCE

SHE Level 2
SCQF Credit Points 20.00
ECTS Credit Points 10.00
Module Code M2N322735
Module Leader Chioma Nwafor
School Glasgow School for Business and Society
Subject Finance and Accounting
Trimester
  • A (September start)

Pre-Requisite Knowledge

Financial Market Environment (level) or equivalent.

Summary of Content

The module will give an overview of financial management and the financial environment within which decisions are made. The financial principles involved in maximising owners' value, agency theory, risk and return will be examined. As well as the operations of the finance function and the application of corporate governance, the module will cover time value of money, NPV and other investment appraisal techniques including the valuation of stocks and bonds. The course will consider the impact of current developments in the capital markets on the investment process and look at their implications for financial management.

Syllabus

Introduction to corporate finance Corporate Governance Time Value of Money NPV and other Investment Criteria Market efficiency Overview of Corporate Financing Risk analysis real options and capital budgeting Capital structure Debt Policy Valuation and capital budgeting of levered firm Dividends and other payouts How corporations issue securities Debt financing Leasing and off balance sheet financing Options and Futures key concepts Warrants and convertibles Mergers and acquisitions Financial distress International corporate finance

Learning Outcomes

On successful completion of this module, the student should be able to: 1. Get an overview of corporate finance2. Understand the concepts of time value of money, present value and future value3. Understand the concepts of risk and return4. Understand the basic of capital structure and dividend policy5. Get and overview of options and derivatives market6. Understand long term financing and international corporate finance

Teaching / Learning Strategy

The module has been designed for delivery through lectures and seminars delivered on campus, supported by web-based material on GCU Learn. The teaching and learning strategy will combine theoretical and illustrative content from lectures or directed learning/web-based materials and seminars. Students will be required to research web-based and other sources to prepare for seminars and coursework. All students will be directed to further reading to support the theoretical and practical content of the module. Assessment strategy The first piece of coursework will be a MCQ assessment with a weighting of 25%. The MCQ will focus on conceptual questions on topics that will be delivered within the first 8 weeks. The final exam will focus on all learning outcomes and will therefore have both theoretical and problem based learning content. The final exam will have a weighting of 75%. The content of the module will help students in broader and deeper thinking, in solving real world problem and in global learning. Feedback strategy A: Facilitating the development of self-assessment Students will be provided with formally assessed first course work to assess their main strengths and weaknesses in their knowledge base. B: Encouraging dialogue Students will be asked to identify examples of feedback they find helpful and to communicate this by e-mail or Blackboard. C: Clarifying good performance Students will be provided with an overall analysis of what constituted good performance. D: Providing opportunities to close the gap between current and desired performance Feedback will identify action points for improving performance . E: Delivering high quality information about your learning. Feedback will prioritize the identified areas for improvement of above average performance as well as including corrective advice where weaknesses are found F: Encouraging positive motivational beliefs and self-esteem Strengths in performance will be identified in any feedback . G: Providing information to teachers that can be used to help shape the teaching When students undertake a self assessment of their work, they will be asked to identify the most challenging areas of their assignments. GSBS will continue to use the advancement of GCU Learn as a blended learning tool through its teaching and learning as well as through engagement with students. GSBS will ensure that all modules are GCU Learn enabled and with the support of the Learning Technologists at the cutting edge of development of online materials. Academic staff and the Learning Technologists will continue to work together to develop and operate all modules on GCU Learn to ensure student support and information sharing. Students are provided with formative and summative feedback via a variety of mechanisms. Feedback on coursework is provided within 3 working weeks of submission.

Indicative Reading

-567 Books and articles: In addition to the main text, other texts, financial articles and web sites will be utilized on this module: Main texts: Brealey R A, Myers S C and Marcus A J, Fundamentals of Corporate Finance, (Latest Edition), McGraw-Hill. Other texts: Webb R and Brahma S; Financial markets and institutions, (2013) Pearson. Pike R and Neale B, Corporate Finance and Investment, Decisions and Strategies, (Latest Edition), Prentice Hall Megginson, W, Smart, S, and Lucy, B. Introduction to Corporate Finance, (latest Edition), South-Western Arnold G, Corporate Financial Management, (Latest Edition), FT Prentice Hall McLaney E, Business Finance, Theory and Practice, (Latest Edition), FT Prentice Hall. Brealey R A, Myers S C, and Allen A, Principles of Corporate Finance, (Latest Edition), McGraw-Hill. Financial sections of newspapers such as The Financial Times, and periodicals like the Economist, and the Investors Chronicle will be identified for reading on background issues and current developments. Company annual accounts and their web sites will be identified for information.

Transferrable Skills

By the end of this module students will have gained competence in the following key areas: Knowledge specific skills An appreciation of the nature of the contexts in which finance can be seen as operating, including knowledge of the institutional framework necessary for understanding the role, operation and function of markets and financial institutions (eg the economic, legal, regulatory and tax environment, both national and international; the firm; the capital markets and the public sector). Knowledge of the theories of finance e.g. concept of financial mathematics and capital budgeting criteria; informational efficiency; principal agency relationships. An understanding of the financing arrangements and governance structures of business entities, and an appreciation of how theory and evidence can be combined to assess the effectiveness and efficiency of such arrangements (eg decisions as to sources of finance and financial structure; the pricing of corporate securities; the market for corporate control; corporate governance structures and mechanisms; financial planning and international dimensions of finance). Cognative abilities and generic skills Communication skills including the ability to present quantitative and qualitative information together with analysis, argument and commentary in a form appropriate to different intended audiences. Capacities for independent and self-managed learning. Numeracy skills, including the ability to manipulate financial and other numerical data and to appreciate statistical concepts at an appropriate level. Skills in the use of communication and information technology in acquiring, analysing and communicating information (these skills include the use of spreadsheets, word processing software, standard statistical packages; electronic financial databases; the internet and email). Critical and reflective thinking.

Module Structure

Activity Total Hours
Tutorials (FT) 22.00
Lectures (FT) 44.00
Assessment (FT) 15.00
Independent Learning (FT) 119.00

Assessment Methods

Component Duration Weighting Threshold Description
Exam (Exams Office) 2.00 75.00 35% Unseen exam.
Exam (Dept) 01 1.50 25.00 35% Class Test