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DEGREE REGULATIONS & PROGRAMMES OF STUDY 2014/2015
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DRPS : Course Catalogue : Business School : Common Courses (Management School)

Postgraduate Course: Finance (MBA) (CMSE11238)

Course Outline
SchoolBusiness School CollegeCollege of Humanities and Social Science
Credit level (Normal year taken)SCQF Level 11 (Postgraduate) AvailabilityNot available to visiting students
SCQF Credits10 ECTS Credits5
SummaryIt is no exaggeration to state that finance is a part of almost all business decisions. Issues of valuation and risk are central to many decisions facing firms.

Discounted cash flow techniques, time value of money, capital budgeting and risk, and other such concepts have entered into the business vocabulary and are used with varying degrees of knowledge and accuracy.

This course is intended to provide a foundation in financial decision making - and an understanding of the techniques of financial analysis. It introduces the key elements of financial management and provides an outline of how to carry out financial evaluations of business decisions.

The course covers both descriptive material on financial markets, institutions and instruments, and analytical material on the assessment of projects and the valuation of securities. Students are expected to cover the basics of net present value on their own.
Course description Session 1: Introduction to Finance
(BMM Ch 1,2,3)
This topic introduces students to the basics of finance. We will analyse what exactly a corporation is and focus on corporate goals. We will look at the role of financial institutions and markets in an economy. We will briefly recap the structure of key financial statements associated with corporations

Session 2: Time value of money and bond valuation
(BMM Ch 5, 6)
In this topic we introduce the concept of discounted cash flow (DCF) and use these insights to value bonds. We describe the characteristics of these corporate securities and look at factors affecting their value

Session 3: Valuing shares
(BMM Ch 7)
In this topic we look at ways to determine share prices, and explore aspects of market efficiency and anomalies.

Session 4: Investment appraisal techniques
(BMM Ch 8)
We introduce the concepts of net present value (NPV), payback rules and the internal rate of return (IRR).

Session 5: Investment appraisal using DCF
(BMM Ch 9, 10)
We build on the foundations of Discounted Cash-Flow (DCF) analysis for the purposes of appraising corporate investment projects, and introduce tools that that facilitate sensitivity analysis of corporate valuations.

Session 6: Risk, return and the WACC
(BMM Ch 11, 12, 13)
In this topic we look at ways in which corporations can measure risk exposures. We divide risks up into market based and idiosyncratic and analyse the benefits of diversification. We derive the relationship between a corporations risk profile and their weighted average cost of capital (WACC). We use the cost of capital as a key element in business valuation.

Session 7: Capital Structure
(BMM Ch 16)
We analyse how a corporation¿s mix of debt and equity affects its value. We begin with a theoretical model and its predictions and we then introduce market frictions such as corporate taxes and financial distress and look at how these affect capital structure decisions

Session 8: Payout Policy and Conclusions
(BMM Ch 17, 25)
We analyse the valuation implications of what a corporation chooses to do with its cash. We describe the effects of dividend payouts and share repurchases. We look at payout policy trends internationally.
We conclude the course by considering some of what we do and do not know about finance.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Co-requisites
Prohibited Combinations Other requirements For Business School PG students only, or by special permission of the School. Please contact the course secretary.
Course Delivery Information
Academic year 2014/15, Not available to visiting students (SS1) Quota:  None
Course Start Semester 1
Course Start Date 15/09/2014
Timetable Timetable
Learning and Teaching activities (Further Info) Total Hours: 100 ( Lecture Hours 27, Summative Assessment Hours 23, Programme Level Learning and Teaching Hours 2, Directed Learning and Independent Learning Hours 48 )
Assessment (Further Info) Written Exam 70 %, Coursework 30 %, Practical Exam 0 %
Additional Information (Assessment) Individual Assignment: 30%
Exam: 70%
Feedback Not entered
Exam Information
Exam Diet Paper Name Hours & Minutes
Main Exam Diet S1 (December)2:00
Learning Outcomes
Knowledge and Understanding:

The course is intended to introduce some of the fundamental concepts underlying finance theory and to outline the role of the finance function within an enterprise.

After completing the course, participants will;

o have an understanding of the functions and aims of financial management
o have an appreciation of some of the main techniques of financial analysis on which finance practice depends
o understand financial decision-making within the organisation
o understand the role of capital markets
o understand how debt and equity are valued in financial markets
o be able to apply simple discounted cash flow analysis to business decisions
o comprehend the criteria used to evaluate investments or capital projects
o appreciate how risk affects project evaluation
o know how to apply the financial approach to evaluate decisions with uncertain outcomes

Cognitive Skills:
The course will develop;

o skills of reasoning and numerical analysis
o comfort with the use of financial calculators familiarity with financial concepts and techniques

Subject Specific Skills:
After completing this course, students should be able to;

o undertake simple financial computations, namely compounding and discounting in order to derive future values and present values for a series of cash flows
o use basic financial methodologies, namely present and future value calculations, to solve problems in finance
o undertake financial valuation using discounted cash flow analysis in situations of uncertainty

Participants will be able to;

o analyse straightforward financial problems that businesses encounter and be able to formulate appropriate solutions
o appraise critically the systems adopted by firms for assessing and approving major capital investments
o undertake a simple investment appraisal using discounted cash flow methods
Reading List
None
Additional Information
Graduate Attributes and Skills Not entered
KeywordsNot entered
Contacts
Course organiserDr Gbenga Ibikunle
Tel: (0131 6)51 5186
Email: Gbenga.Ibikunle@ed.ac.uk
Course secretaryMiss Kate Ainsworth
Tel: (0131 6)51 3854
Email: Kate.Ainsworth@ed.ac.uk
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