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COURSE PRE-REQUISITES:
A familiarity with basic Financial Accounting, Quantitative Methods and Statistics.
COURSE DESCRIPTION:
This is an introductory course in Finance and the first in a series of required Finance core
courses for the B.Sc. Accounting & Finance degree. This course together with the next
course, Corporate Finance, completes an introduction to Financial Management using the
modern theory of finance. The final required course in the sequence, Intermediate
Finance, introduces advanced topics and explores certain topics in depth.
Firms invest in real assets such as plant and equipment (the Investment decision) and
raise money via personal funds, stocks, bonds or bank loans (the Financing decision).
Broadly speaking, Financial Management is about how these Investment and Financing
decisions should be made. This course explores the first part of Financial Management
and introduces the framework, tools and techniques for making Investment decisions.
Specifically, we will cover Valuation, Capital Budgeting, Modern Portfolio Theory and
Equilibrium Risk-Return Relationship.
GRADING:
Quizzes:
Quiz 1: session 5
Quiz 2: session 9
Quiz 3: session 16
Project: The project is about applying Stock Valuation and Risk/Return techniques learnt
in the course to companies listed on Karachi Stock Exchange. Details of the project will
be given in session 2.
READING:
The required reading for the course constitutes relevant chapters from the book and
occasional lecture handouts. These Handouts will be posted on the course web site a
day before each lecture.
An Introduction To Finance
Sep
1 The firm and the financial manager BMM
3,4
Ch 1&2
An Overview Financial Environments.
(Capital Markets & Corporate Finance.); BMM
5,6 2 An Introduction to Financial Markets, Financial Ch 2
Institutions and Financial Instruments.
Consumption Savings & Investment,
Basic Financial Statements;
10,11 3 Balance Sheet; Income Statements & Cash Flow BMM
Statements; An analysis of Cash flow Statements. Ch 3
Time Value Of Money
1st Quiz Compounding & Discounting; Future and present
12,13
4 value; Level and Uneven Cash Flows; BMM
Ch 4
Time Value Of Money ( Continued) BMM
Perpetuities and Annuities; Various Application of Ch 4
17,18 5
TVM; TVM as Basis Of Valuation of Financial Handout
Instruments.
Time Value Of Money (Continued) ; Various BMM
19,20 6 Application of TVM; TVM as Basis Of Valuation Ch 5
of Financial Instruments.
Valuation -Valuing Bonds BMM
Bond Characteristics; Basic Valuation Model; Ch 5
2nd Quiz
24,25 Bond Prices and Yields; Different Types of yields;;
7
Forward Rates and Theories of Term Structure;
The Yield Curves;
Valuation -Valuing Bonds
Bond Prices and Interest Rates: Price Volatility:
26,27 8
Price Sensitivity; Bond Duration and Convexity BMM
Ch ,6
Valuation - Stocks
Different Type of Stocks; Some Stock BMM
Oct
9 Classifications. An Overview of Valuation of Ch ,6
1,2
Stocks Basic Stock Valuations Models; Dividend
Discount Models and Other Models
Valuation -Valuing Bond & Stocks BMM
Oct
10 Basic Stock Valuations Models; Dividend Ch 6
3,4
Discount Models and Other Models
8 11 Mid Term Examination
A Proposed Outline of the Course on
Principles of Finance
Date Session Topics Readings
Month No Body of Knowledge Book & Handouts
/Day
COURSE PRE-REQUISITES:
COURSE DESCRIPTION:
This is an introductory course in Finance and the first in a series of required Finance core
courses for the B.Sc. Accounting & Finance degree. This course together with the next
course, Corporate Finance, completes an introduction to Financial Management using the
modern theory of finance. The final required course in the sequence, Intermediate
Finance, introduces advanced topics and explores certain topics in depth.
Firms invest in real assets such as plant and equipment (the Investment decision) and
raise money via personal funds, stocks, bonds or bank loans (the Financing decision).
Broadly speaking, Financial Management is about how these Investment and Financing
decisions should be made. This course explores the first part of Financial Management
and introduces the framework, tools and techniques for making Investment decisions.
Specifically, we will cover Valuation, Capital Budgeting, Modern Portfolio Theory and
Equilibrium Risk-Return Relationship.
GRADING:
Quizzes (4) 20 %
Midterm 30 %
Final 30 %
Project 20 %
Quizzes:
Two unannounced and three announced quizzes shall be given, only 4 best shall be
counted, Announced quizzes shall be held on following sessions
Quiz 1: session 4
Quiz 2: session 7
Quiz 3: session 16
Project: The project is about applying capital budgeting techniques learnt in the course to
a proposed project,. Details of the project will be given in session 5.
READING:
The required reading for the course constitutes relevant chapters from the book and
occasional lecture handouts. These Handouts will be posted on the course web site a
day before each lecture.
COURSE SCHEDULE: