Code
MGFE FIN 4401
Level
M1
Field
Finance
Language
Anglais/English
ECTS Credits
2
Class hours
20
Total student load
60
Program Manager(s)
Educational team
Introduction to the module
This is an intermediate course in finance. It considers some of the most important issues concerning firms’ investment and financing decisions.
Topics include time value of money, valuation of assets, capital budgeting, risk and return, capital asset pricing model (CAPM), portfolio theories, MM theory, etc.
Learning goals/Programme objectives
- LG2 Having the ability to manage uncertainty and complexity with accuracy and rigor
- LG3 Having the foundations of responsible and sustainable management
Learning objectives/Intended learning outcomes
- 2.1 - Identify and analyze in depth problems, causes and impacts
- 2.2 - Explore solutions, decisions, and their relative and absolute impacts
- 2.3 - Identify optimal solution(s) and priorities toward implementation
- 2.4 - Implement a plan, prepare for changes, and measure the success of actions with regard to strategy and stakeholder
- 3.1 - Understand and employ basic concepts, knowledge and theories related to the discipline
- 3.2 - Apply discipline knowledge appropriately and effectively
- 3.4 - Select and employ judiciously appropriate techniques and tools within the discipline
Rubrics
In this course, we will study two major decisions that a firm faces:
Investment decision (capital budgeting) – what projects to invest in and how much to invest?
Financing decision (capital structure) - how to raise the funds needed for the investment?
Content : structure and schedule
1. A Review on Finance
1.1 Financial System
1.2 Best Long-term Investment
1.3 Crisis Analysis
2. Portfolio Theories
2.1 Mathematical Preparation
2.2 Returns
2.3 Risk
2.4 Portfolio
3. Efficient Frontier
3.1 Efficient Frontier without Risk-free Asset
3.2 Efficient Frontier with Risk-free Asset
4. CAPM
4.1 Sharpe Ratio
4.2 Capital Asset Pricing Model (CAPM)
5. Capital Budgeting
Recall on Accounting and Time Value of Money
5.2 Forecast FCF
5.3 NPV and IRR
6. Stock Valuation
Constant Dividend-Discount Model
6.2 Constant Dividend Growth
6.3 Dividend vs. Investment and Growth
6.4 Changing Growth Rates
6.5 Limitations of the Dividend-Discount Model
7. Bonds Valuation
7.1 Bond Cash Flows, Prices and Yields
7.2 Dynamic Behavior of Bond Prices
7.3 Corporate Bonds
7.4 Bond Ratings
8. Cost of Capital
8.1 8.1 The Equity Cost of Capital
8.2 The Debt Cost of Capital
8.3 A Project’s Cost of Capital
8.4 Weighted Average Cost of Capital
Sustainable Development Goals
Goal 9: Industry, innovation and infrastructure
Number of SDG's addressed among the 17
1
Learning delivery
synchrone
Pedagogical methods
Lecture + In-class Exercises
Real world data analysis and examples are an integral part of the course.
Exercise: Solve problem sets after each topic in class and at home if needed.
Evaluation and grading system and catch up exams
Attendance is mandatory for the course.
The final grade of this course consists of:
- 40% mid-term exam
- 60% (2h) final exam
- Bonus points according to the attendance and participation to class discussion
- Resit exam (2h) in case of failing. The resit exam will stand alone for the final grade and will be limited to 12.
Module Policies
Professor-Student Communication
● The professor will contact the students through their school email address (IMT-BS/TSP) and the Moodle portal. No communication via personal email addresses will take place. It is the student responsibility to regularly check their IMT-BS/TSP mailbox.
● Students can communicate with the professor by emailing him/her to his institutional address. If necessary, it is possible to meet the professor in his office during office-hours or by appointment.
Students with accommodation needs
If a student has a disability that will prevent from completing the described work or require any kind of accommodation, he may inform the program director (with supporting documents) as soon as possible. Also, students are encouraged to discuss it with the professor.
Class behavior
● Out of courtesy for the professor and classmates, all mobile phones, electronic games or other devices that generate sound should be turned off during class.
● Students should avoid disruptive and disrespectful behavior such as: arriving late, leaving early, careless behavior (e.g. sleeping, reading a non-course material, using vulgar language, over-speaking, eating, drinking, etc.). A warning may be given on the first infraction of these rules. Repeated violators will be penalized and may face expulsion from the class and/or other disciplinary proceedings.
● The tolerated delay is 5 minutes. Attendance will be declared on Moodle during these 5 minutes via a QR code provided by the teacher at each course start.
● Student should arrive on time for exams and other assessments. No one will be allowed to enter the classroom once the first person has finished the exam and left the room. There is absolutely no exception to this rule. No student can continue to take an exam once the time is up. No student may leave the room during an examination unless he / she has finished and handed over all the documents.
● In the case of remote learning, the student must keep his camera on unless instructed otherwise by the professor.
Honor code
IMT-BS is committed to a policy of honesty in the academic community. Conduct that compromises this policy may result in academic and / or disciplinary sanctions. Students must refrain from cheating, lying, plagiarizing and stealing. This includes completing your own original work and giving credit to any other person whose ideas and printed materials (including those from the Internet) are paraphrased or quoted directly. Any student who violates or helps another student violate academic behavior standards will be penalized according to IMT-BS rules.
Textbook Required and Suggested Readings
Bodie Z., Kane A., Marcus A.J. (2013), Investments, 10th edition, McGraw- Hill.
Berk, J., DeMarzo P. (2017) Corporate finance, Pearson.
Siegel J. (2014) Stocks for the long run, 5th edition, McGraw-Hill.
CFA books in Portfolio Management and Equities (levels I and II).
Malkiel B. (2008) A random walk down Wall Street, 9th edition, Norton.
Keywords
Investment, Stock, Capital budgeting, CAPM, Portfolio
Prerequisites
Basic knowledge on statistics and finance