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Module Catalogue

IB9RR-15 Foundations of Financial Management

Department
Warwick Business School
Level
Taught Postgraduate Level
Module leader
Ruslan Sverchkov
Credit value
15
Module duration
10 weeks
Assessment
30% coursework, 70% exam
Study location
University of Warwick main campus, Coventry

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Introductory description

This module is part of a “pair” of modules to cover the Finance core for the new MSAFM course. Both modules will cover both the “buy side” and “sell side” angle, buy split content by “depth of coverage” into “foundations” (this module, Term 1) and “advanced topics” (parallel proposal of second Term 2 module).
This module will lay down the foundations of finance theory (recalling that typical MSAFM students will be “non-specialists”), on which the “advanced” topics in the Term 2 core module, but also selected Term 2 electives from the Finance portfolio of masters courses, can build.

Module aims

  • Introduce the characteristics of different classes of financial assets, their uses for both firms and investors, and the mechanics of the markets on which these assets trade.
  • Develop an understanding of the fundamental trade-off between risk and return, and develop the tools to quantify and operationalise this trade-off.
  • Introduce the key decisions involved in “corporate financial management”, and develop an understanding of the objectives and constraints that drive these decisions.
  • Develop the conceptual understanding and practical tools required to make optimal investment decisions in the presence of uncertainty (“risk”).
  • Provide students with structured opportunities to practise the acquired skills and knowledge using “real world” data and case studies.

Outline syllabus

This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.

PART A: Foundations
Financial Markets & Instruments
Drivers of Return: Time Value
Drivers of Return: Risk
PART B: “buy side” (investor’s perspective)
Equity Valuation
Bond Valuation
Optimal Portfolio Allocation
Capital Asset Pricing Model
PART C: “sell side” (firm’s perspective)
Capital Structure (Financing Decision)
Capital Budgeting (Investment Decision)
Pay-out Policy

Learning outcomes

By the end of the module, students should be able to:

  • Explain the characteristics, typical “use cases” of, and risks involved in, different classes of financial assets
  • Demonstrate a profound understanding of the fundamental trade-off between risk and return, and how this affects value and decision-making
  • Describe the key decisions involved in corporate financial management, and the objectives and constraints that drive these decisions.
  • Use a variety of quantitative tools to analyse financial data to derive/evaluate optimal decision-making
  • Analyse case studies and construct arguments to support a particular solution

Indicative reading list

Bodie Z, Kane A & Marcus AJ (BKM) Essentials of Investments (12th “international student” edition), McGraw-Hill 2022
Hillier D, Ross SA, Westerfield RW, Jaffe J & Jordan BD (HRWJJ) Corporate Finance (4th “European” edition), McGraw-Hill 2020

Subject specific skills

Apply quantitative methods to calculate the values of different financial assets.
Analyse a firm’s financial statements and use this to evaluate optimal corporate financing, investment, and pay-out decisions.
Assess the risks of investment opportunities using a variety of quantitative tools, and use this to derive or evaluate optimal portfolio choice.

Transferable skills

Problem solving
Use of numerical and statistical tools
Communicate complex ideas effectively, both verbally and in writing

Study time

Type Required
Lectures 10 sessions of 2 hours (13%)
Seminars 9 sessions of 1 hour (6%)
Private study 50 hours (33%)
Assessment 71 hours (47%)
Total 150 hours

Private study description

No private study requirements defined for this module.

Costs

No further costs have been identified for this module.

You do not need to pass all assessment components to pass the module.

Assessment group D
Weighting Study time Eligible for self-certification
Assessment component
Class Participation 10% 7 hours No
Reassessment component is the same
Assessment component
Individual Assignment 20% 14 hours Yes (extension)
Reassessment component is the same
Assessment component
Centrally-timetabled examination (On-campus) 70% 50 hours No

Written exam

  • Answerbook Pink (12 page)
  • Students may use a calculator
Reassessment component is the same
Feedback on assessment

via my.wbs

Past exam papers for IB9RR

There is currently no information about the courses for which this module is core or optional.