| Unit name | Principles of Finance |
|---|---|
| Unit code | ACCG20012 |
| Credit points | 20 |
| Level of study | I/5 |
| Teaching block(s) |
Teaching Block 4 (weeks 1-24) |
| Unit director | |
| Open unit status | Not open |
| Pre-requisites |
EFIM10002 Financial Accounting 1 and EFIM10004 Managerial Finance; or ACCG10052 Introduction to Accounting |
| Co-requisites |
None |
| School/department | School of Economics, Finance and Management |
| Faculty | Faculty of Social Sciences and Law |
The course looks at asset pricing, and investment and financing decisions.
The first half of the course provides a grounding in the pricing of financial securities issued by corporations and governments. It begins with a review of discounting, the time value of money and the present value rule. Attention then turns to the nature and pricing of fixed income securities, followed by consideration of equity markets and the pricing of stocks. Here we focus on portfolio theory and the Capital Asset Pricing Model. The first half closes with an evaluation of whether security markets are efficient, in the sense that genuine economic profits are not available from trading bonds and stocks.
In the second term the course returns to discounting as part of a more detailed analysis of the capital investment decision. It then investigates how to calculate discount rates by studying the components of the weighted average cost of capital; and the effect of capital structure on these components. This leads to the traditional and Modigliani and Miller theories of gearing, and on to dividend policy.
Lectures, seminars
Formative: 4 mathematical/written exercises per year requiring the tackling of problems using and explaining the basic tools that they have been taught, covering the main issues in finance (ie assessing all learning outcomes in each exercise).
Summative: 3-hour written exam, assessing all learning outcomes.
OR
