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DRPS : Course Catalogue : Business School : Business Studies

Undergraduate Course: Principles of Finance (BUST08003)

Course Outline
SchoolBusiness School CollegeCollege of Arts, Humanities and Social Sciences
Credit level (Normal year taken)SCQF Level 8 (Year 2 Undergraduate) AvailabilityAvailable to all students
SCQF Credits20 ECTS Credits10
SummaryThe course aims to develop in students an understanding of the basic principles of finance. It builds on the introduction to finance provided in Foundations of Business. The course has a quantitative slant, and is designed to give a theoretical introduction to financial markets and company finance policies. It is a prerequisite for finance Honours courses.
Course description The course looks at the way assets are valued in financial markets. It considers interest rates and the pricing of fixed-income bonds; stock market prices and returns; stock market risk and the influence of risk on the pricing of shares; and the characteristics and pricing of financial futures and options. The course also covers some aspects of company finance theory. These include business investment decisions, sources of finance, the cost of capital, the financial structure decision and the dividend decision.

Prices and Returns in Financial Markets -
- Financial decision making;
- Price of a stream of cash flows;
- Bond prices;
- Stock prices;
- Option prices;
- Risk and return.

Company Financial Decisions -
- Introduction to corporate finance;
- The capital budgeting decision;
- Sources of finance;
- Cost of capital;
- Capital structure;
- Dividend policy.

The students are introduced to the topics in lectures. The topics are then related to particular situations in tutorials, thereby showing how principles apply in practice. The coursework assignment requires students to analyse and discuss a particular issue using their own judgement where relevant.
Entry Requirements (not applicable to Visiting Students)
Pre-requisites Students MUST have passed: ( Global Challenges for Business (BUST08035) AND The Business of Edinburgh (BUST08036)) OR Introduction to Business (BUST08026) OR ( Industrial Management 1 (BUST08002) AND Techniques of Management (MAEE08002)) OR Economics 1 (ECNM08013) OR Economic Principles and Applications (ECNM08002) OR ( Economic Applications (ECNM08003) AND Economic Principles (ECNM08004))
Prohibited Combinations Students MUST NOT also be taking Introduction to Financial Markets (BUST08029) OR Introduction to Corporate Finance (BUST08030)
Other requirements NOTE: for Economics with Management Science programme, EITHER Principles of Finance (BUST08003)OR Business Economics (BUST08005) is a mandatory course in year 2.
Information for Visiting Students
Pre-requisitesVisiting students must have at least 1 introductory level Business Studies course at grade B or above for entry to this course. We will only consider University/College level courses.
High Demand Course? Yes
Course Delivery Information
Academic year 2019/20, Available to all students (SV1) Quota:  None
Course Start Semester 1
Timetable Timetable
Learning and Teaching activities (Further Info) Total Hours: 200 ( Lecture Hours 20, Seminar/Tutorial Hours 8, Summative Assessment Hours 3, Programme Level Learning and Teaching Hours 4, Directed Learning and Independent Learning Hours 165 )
Assessment (Further Info) Written Exam 80 %, Coursework 20 %, Practical Exam 0 %
Additional Information (Assessment) Assignment in semester 1 (1,200 words maximum) = 20%, December degree exam = 80%; August resit exam = 100%.
Feedback Coursework marks will be published via Learn. Students can also look at their individual feedback in the Undergraduate Office (Room 1.11, Business School, 29 Buccleuch Place) and take away a copy of the feedback form.

Examination marks will be posted on Learn (together with generic feedback and examination statistics) as soon as possible after the Board of Examiners meeting (normally end of January/beginning of February). Students will have the opportunity to look at their examination scripts from early February in the UG Office.
Exam Information
Exam Diet Paper Name Hours & Minutes
Main Exam Diet S1 (December)2:30
Resit Exam Diet (August)2:30
Learning Outcomes
On completion of this course, the student will be able to:
  1. Describe the main financial assets and how they may be valued.
  2. Describe the key aspects of company finance theory.
  3. Discuss critically the contribution of finance theory to financial practice.
Reading List
Recommended reference book

Jonathan Berk and Peter DeMarzo, Corporate finance, 3rd edition (Global edition), 2013, Pearson

Additional reference books

Glen Arnold, Essentials of corporate financial management, 2007, Financial Times/Prentice Hall

Peter Moles, Robert Parrino, and David Kidwell, Corporate finance, (European edition), 2011, John Wiley & Sons
Additional Information
Graduate Attributes and Skills On completion of the course, students will be able
- to demonstrate that they can work in a tutorial group to analyse a financial problem using concepts covered in the lectures;
- to demonstrate that they can solve simple problems in finance;

They will
- have been encouraged to develop their written skills through the coursework assignment and the degree examination;
- be able to demonstrate an ability to solve numerical problems through tutorials and the degree examination;
- be able to communicate effectively in a tutorial group;
- be aware of the techniques and insights relevant to the valuation of financial assets and company financial decisions;
- be aware of the uses and limitations of these techniques and insights.
Additional Class Delivery Information 2 x 1 hour lectures per week, weeks 1-10; plus compulsory tutorials, 1 hour per week for 8 weeks, weeks 3-10.
KeywordsNot entered
Course organiserMs Yue Liu
Tel: (0131 6)50 4309
Course secretaryMr Matthis Hervieux
Tel: (0131 6)50 8336
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