Dr Georgy Chabakauri OLD M2.15

Dr Dong Lou OLD M3.10

This course is available on the MSc in Management, MSc in Management (CEMS MIM), MSc in Management, Information Systems and Innovation, MSc in Real Estate Economics and Finance and MSc in Risk and Finance. This course is available with permission as an outside option to students on other programmes where regulations permit.

This course is not open to students in the MSc Accounting and Finance and in the MSc Finance and Economics.

Students should be comfortable with 'High School' level Mathematics and simple algebra, e.g. the ability to solve linear systems of two equations and two unknowns.

New Present Value: The goals of the firm. Interaction of firms and capital markets. Asset valuation with known cash flows. Bond valuation: Term structure of interest rates. Forward rates and loans. Duration. Stock valuation: The Gordon growth model and variants. The functioning of equity markets. Risk and return: What is risk? The portfolio frontier. Capital Asset Pricing Model (CAPM) What is the price of risk? The capital markets model. Alternatives to CAPM. Market efficiency Valuation of risk cash flows. Capital budgeting. A first course in financial analysis for students with a basic knowledge of management. The course explores the way that firms and the capital market function to channel savings toward productive investments. From the investor's perspective it considers characteristics of the major financial contracts and the principles used in their valuation. It considers how investors should select their portfolios and the implications of this behaviour for pricing assets in stock and bond markets. It explores the question of whether stock markets are efficient in reflecting investors information. It applies these insights to the firm's financial management decision of whether or not to invest in a risky project and how to select among alternative investments.

30 hours of lectures in the MT. 30 hours of lectures in the LT. 3 hours of lectures in the ST.

Ten three-hour lecture and seminar sessions. This course is taught twice, in both Michaelmas and Lent Term. Students must either register for FM473 A which is taught in Michaelmas Term, or FM473 B which is taught in Lent Term

Brealey, Myers and Allen, Principles of Corporate Finance.

Exam (100%, duration: 2 hours) in the main exam period.