FIN2002S

Principles of Finance

WELCOME MESSAGE

As module coordinator of the Principles of Finance module, I welcome you to the module.

The finance sector is a major driving force of a country’s economy. It encompasses the creating and maintaining of wealth, and overall managing of money that is crucial to the success of every business. Very broad areas, finance professionals can be found in every industry helping businesses as well as individuals.

The subject of Principles of Finance provides a mixture of both theory and practise. It aims to provide the students with an introduction to the role of Finance, financial markets, financial institutions as well as analysis of financial securities, thus providing a solid foundation for further study or employment in the financial services industry.

To successfully complete this module, it is strongly recommended that a consistent routine of studies is maintained, and several learning activities such as course assignments are to be completed at the stated submission date(s).

The graduates will have a wealth of career choices within and beyond the finance sector. You will be equipped for success in fields such as credit, corporate finance, financial planning and services, investment and wealth management.

This study guide outlines the discussion areas for each session. It is essential for these to be read prior to the sessions to have a better understanding in the subject topics.

PART 1:  INTRODUCTION

This Study Guide is designed to provide you with details of the module FIN2002S – Principles of Finance, the learning outcomes, delivery and assessment arrangements. The Study Guide consists of 6 parts.

Part 1 gives background details to the subject area are provided and the broad aims of the module are set out.

Part 2 consists of the module outline. In this part the (a) module learning outcomes, (b) the themes and topics to be explored are explained along with the (c) learning supports to be used.

Part 3 gives details of the module delivery arrangements. It sets out the session arrangements and the expectations in relation to your prior preparation and student engagement.

Part 4 provides details of the assessment techniques used in this module explaining the assessment components, their rationale.

Part 5 explains the UCD grading policy and grade descriptors drawing on the university document are given for each assessment component (i) Assignment and (ii) Examination.

Part 6 presents the concluding comments.

Accessing Live Zoom Classes

Please log into Brightspace, go to “FIN2002S-Principles of Finance-2023/24 Summer”, click “My Class”, “Zoom”.

Please always login using your UCD email address and your name. Your name should be visible to the lecturer and other students to facilitate collaboration.

Please join your online session no later than five minutes before the advised time of your session.

Engagement tools on ZOOM

Throughout the online sessions for this module, you will be frequently asked to engage with both your lecturer, and with your fellow students.

The lecturer may send you into breakout groups and you discuss some class content in smaller groups before your findings are discussed with the whole class. You may use the “Share Screen” function (if enabled) to show some summary points of the breakout group discussions.

If you select “Chat”, a chat window will open and you can communicate with the whole class or with your lecturer. If you would like to send a private message to your lecturer, please select your lecturer’s name instead of everyone.

By clicking on “Reactions”, another menu will open. This menu allows you to raise your hand if you have a question or would like to comment. If you see a hand icon in the left upper corner of your screen, your hand is currently raised. You can lower your hand by clicking on this icon a second time. The lecturer can also lower your hand.

When you join a Zoom session, you will be muted, and your camera is turned off. But for better engagement in the class, it is advised to keep your camera turned on. Please only unmute yourself if you would like to speak to avoid background noises. You can change your audio and video setting by clicking the small arrow beside the “Unmute” or “Start Video” icon. For more information please see https://buselrn.ucd.ie/student/category/using-zoom/

Background Details

a. Background to the Topic

This course provides an introduction to the principles of banking and finance. It module covers the fundamental basics of finance. The module will address issues such as why corporate finance is important and will introduce the theoretical underpinnings of financial concepts. A comprehensive range of issues including the role of corporate governance and agency theory in finance, how the stock and bond markets function, pricing stocks and bonds, and capital budgeting techniques will be introduced.

The topics covered in this module will allow students to learn about the concepts and theories in finance that would help investors and business decision-makers in making investment and financing investments as well as knowing how risk can be managed.

The knowledge obtained from this course would be very valuable for one’s to embark on a professional or business career in either the Financial Markets or the different Financial Institutions.

b. Module Aims

The aims of this module are to

- enable students to understand the importance of corporate finance and the theoretical underpinnings of financial concepts.

- enable students to understand the valuation of stocks and bonds.

- enable students to understand the role of corporate governance and agency theory in finance.

- allow students to apply capital budgeting techniques in the project evaluation process

Module philosophy

The module draws on student prior learning and work experience and combines insights from strategy, international trade and investment theory, human resource management and other areas.

The assessment tasks for this module have been designed with this in mind as detailed later in the study guide.

PART 2:  MODULE OUTLINE

Module Title: Principles of Finance

Module Code: FIN2002S

No. of ECTS: 10

Module Learning Outcomes

On completing this module, students will be expected be able to:

· Understand the importance and the role of Finance

· Apply valuation methods to both stocks and bonds

· Apply the techniques of capital budgeting and identify capital investment projects that maximize shareholder wealth

· Understand the concepts of risk and return and the basic principles of portfolio theory.

Module Text: Basic Finance: An Introduction to Financial Institutions, Investments, and Management (13^th Edition)

Cengage Learning by Herbert B. Mayo; Michael J. Lavelle

ISBN: 9780357714744 

Supplementary text 1: Principles of Finance (6^th Edition),
Cengage by Besley, S and Brigham, E. F.
ISBN: 9781285429649

Supplementary text 2: Corporate Financial Management. (6^th Edition).

Pearson Education Limited by Arnold, G. and Lewis, D.

ISBN: 9781292140445

Themes and Topics

Part 1 Introduction to Finance:

· The finance world

· The objective of the firm.

· Corporate governance and agency theory.

Part 2: Valuation of Securities:

· Time value of money

· Present value and future value

· Valuation of bonds.

· Valuation of stocks

Part 3: Capital Budgeting decision:

· Net present value (NPV),

· Internal rate of return (IRR), and

· payback period methods

· Other project appraisal methods 

Part 4: Portfolio Theory:

· Risk and Return.

· Portfolio analysis: mean-variance portfolio theory. 

· Efficient portfolios

· Capital Asset Pricing Model (CAPM) 

· Efficient Market Hypothesis

Learning Materials

For this module, please read the assigned chapters in the prescribed text and attempt the learning activities in the hand-outs prior to attending the sessions.

Other useful sources

The following textbooks’ companion websites provide a self-quiz and study program that allows students to evaluate their performance through a practice test and recommendations:

· https://media.pearsoncmg.com/intl/global/ema_ge_mishkin_econmbfm_11/index.html 

· http://wps.pearsoned.co.uk/ema_ge_mishkin_econmbfm_10/226/58088/14870766.cw/index.html

· http://wps.aw.com/bp_mishkin_econmbfm_10/215/55045/14091673.cw/index.html

Students completing this module are expected to participate in session discussions and learning activities and be familiar with recent developments in the business world. To facilitate this, the following source material is useful

· The Economist

· The Wall Street Journal

· The Straits Times

· The Financial Times

· Business Week

· Fortune

· Investopedia.com