CORPFIN 7005 - Principles of Finance (M)
North Terrace Campus - Semester 2 - 2015
General Course Information
Course Code CORPFIN 7005 Course Principles of Finance (M) Coordinating Unit Business School Term Semester 2 Level Postgraduate Coursework Location/s North Terrace Campus Units 3 Contact Up to 3 hours per week Available for Study Abroad and Exchange Y Corequisites ACCTING 7019 Assumed Knowledge COMMERCE 7033 Course Description This course introduces you to the world of modern finance, especially to the financial operations of a business. It covers the concepts of time value of money, basic asset valuation, risk and return paradigm, capital budgeting and financing decisions. Upon completion, students will be able to value bonds and stocks, estimate asset returns according to their risk characteristics and identify capital projects that maximize shareholder's wealth using a wide range of analytical tools. They will also develop a good understanding on how firms finance their capital expenditure and the levels of dividends and other payouts for their shareholders.
Course Coordinator: Associate Professor Chee Cheong
Name: Chee Cheong (Lecturer-in-Charge)
Location: Room 12.41, Nexus 10, 10 Pulteney Street, Adelaide
Telephone: 8313 0356 (work)
Name: Ivan Obaydin (Lecturer)
Location: Room 12.46, Nexus 10, 10 Pulteney Street, Adelaide
The full timetable of all activities for this course can be accessed from Course Planner.
Course Learning OutcomesThe basic objective of this finance foundation course is to summarise the fundamental theoretical aspects of finance relevant to the future study of finance and application within a range of profession including accounting and property valuation issues.
By the end of this course students should be able to:
- Explain the financial goal governing a firm’s decisions
- A deep understanding of the concepts of time value of money and its application to various valuation models to value long-term debt, preference shares and ordinary shares
- Explain the importance, role and techniques of capital budgeting in a project or firm
- Understand risk and return, diversifiable and non-diversifiable risk, and asset pricing models
- Understand how to determine the cost of capital of a project or firm
- Explain operating and financial leverage, and implications for the target capital structure
- Discuss theories and issues related to dividend policy
- Identify & apply ethical principles relevant to the finance profession
University Graduate Attributes
This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:
University Graduate Attribute Course Learning Outcome(s) Knowledge and understanding of the content and techniques of a chosen discipline at advanced levels that are internationally recognised. 1, 2, 3, 4, 5, 6 & 7 The ability to locate, analyse, evaluate and synthesise information from a wide variety of sources in a planned and timely manner. 2, 3, 4, 5 & 6 Skills of a high order in interpersonal understanding, teamwork and communication. 3, 4 & 5 A proficiency in the appropriate use of contemporary technologies. 2 & 3 An awareness of ethical, social and cultural issues within a global context and their importance in the exercise of professional skills and responsibilities. 8
Ross, Christensen, Drew and Bianchi, Fundamentals of Corporate Finance, 6th Edition, McGraw-Hill, 2013.
This course requires considerable mathematical computation. Although much of it is relatively simple, access to an appropriate calculator is necessary. If you intend to purchase a calculator for this course, you will find it useful to purchase a financial calculator.
Recommended ResourcesReference Books
Berk, DeMarzo, Harford, Ford, Mollica & Finch, Fundamentals of Corporate Finance, 2nd edition, Pearson, 2013.
Brigham and Houston, Fundamentals of Financial Management, 13th Edition, Thomson, 2013.
Pierson, Brown, Easton, Howard and Pinder, Business Finance, 11th Edition, McGraw Hill, 2011.
Learning & Teaching Activities
Learning & Teaching ModesLectures, Tutorials & Workshops
This course will offer 2-hour lecture per week from week 1 to week 12. In addition to the lectures, 1 hour tutorial class will be offered from week 2 until week 12 and 2-hour workshop will be offered over 6-week period.
Tutorials & Workshops
Tutorial classes will be held weekly from week 2 to 12. Workshops will be held weekly from week 7 to 12. Membership of tutorial (workshop) classes is to be finalised by the end of the second week of semester. Students wishing to swap between tutorial (workshop) classes after this time are required to present their case to the Lecturer-in-Charge, but should be aware that such a request may not be approved.
Tutorials and workshops are an important component of your learning in this course. The communication skills developed in tutorials/workshops by regularly and actively participating in discussions are considered to be most important by the School and are highly regarded by employers and professional bodies.
The information below is provided as a guide to assist students in engaging appropriately with the course requirements.Students in this course are expected to attend all lectures throughout the semester plus one tutorial class each week.
The University expects full-time students (i.e. those taking 12 units per semester) to devote a total of 48 hours per week to their studies. This means that you are expected to commit approximately 9 hours for a three-unit course or 13 hours for a four-unit course, of private study outside of your regular classes.
Learning Activities SummaryThe schedule of lecture topics for this course is as follows:
Topic 1: Introduction Issues in Corporate Finance – the scope and activities of corporate finance, principles roles of corporate finance manager & the key objective of financial management.
Topic 2: Valuing Bonds and Shares – introduction to bonds, valuation of bonds, introduction to shares & valuation of shares.
Topic 3: Capital Budgeting – introduction to various capital budgeting criteria, application of criteria to investment proposals, advantages and disadvantages of each criteria.
Topic 4: Cash Flow Estimation and Analysis of Risk – determination of relevant cash flows for investment analysis, sources of risk in cash flow forecasting, assessment of forecasting risk, implications of management options in project evaluation.
Topic 5: Risk and Return, and Capital Market Efficiency – introduction to the concept of expected returns & volatilities for individual assets and for portfolios of assets, a brief discussion about efficient market hypotheses.
Topic 6: Portfolio Management and Asset Pricing – introduction to the concept of diversification strategy, Capital Asset Pricing Model, Arbitrage Pricing Model & empirical models.
Topic 7: Cost of Capital – determination of cost of equity, cost of preference share, cost of debt and weighted average cost of capital (WACC).
Topic 8: Capital Structure and Leverage – introduction to common types of long term capital, Modigliani and Miller capital structure decision, effects of corporate taxes and effects of financial distress.
Topic 9: Dividend Policy – distribution to shareholders in dividends and share repurchases.
The University's policy on Assessment for Coursework Programs is based on the following four principles:
- Assessment must encourage and reinforce learning.
- Assessment must enable robust and fair judgements about student performance.
- Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
- Assessment must maintain academic standards.
Online Test 1 (10%)
Online Test 2 (10%)
Workshop Ethics Presentation, Peer Review and Quiz (15%)
Final Exam (65%)
No information currently available.
No information currently available.
Grades for your performance in this course will be awarded in accordance with the following scheme:
M10 (Coursework Mark Scheme) Grade Mark Description FNS Fail No Submission F 1-49 Fail P 50-64 Pass C 65-74 Credit D 75-84 Distinction HD 85-100 High Distinction CN Continuing NFE No Formal Examination RP Result Pending
Further details of the grades/results can be obtained from Examinations.
Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.
Final results for this course will be made available through Access Adelaide.
The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.
SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.
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