Dr Pascal Frantz OLD 3.07 and Mr Jose Carabias Palmeiro OLD 2.13

This course is available on the CEMS Exchange, Global MSc in Management, Global MSc in Management (CEMS MIM), Global MSc in Management (MBA Exchange), MBA Exchange, MSc in Accounting and Finance, MSc in Accounting, Organisations and Institutions, MSc in Law and Accounting, MSc in Management and Regulation of Risk, MSc in Management and Strategy and MSc in Risk and Finance. This course is available with permission as an outside option to students on other programmes where regulations permit.

Other students may be admitted to the course if they have a reasonable knowledge of financial accounting and finance acquired at undergraduate or equivalent level, and only with the agreement, in writing, of the teacher responsible for this course.

Enrolment on this course is constrained by section size and the number of sessions available. Students are admitted on the course on a first-come-first-served basis. If the course is over-subscribed, students on the waiting list will continue to be admitted on a first-come-first-served basis as places become available, but MSc students on the Accounting programmes will only then be given priority although cannot be guaranteed a place if no places become available. Therefore, to avoid frustration and possibly being unable to take the course, students wishing to reduce the risk of non-admittance on the course should prioritise their courses and register early for their preferred, “must have” courses. Late registrations or late changes to this course choice may be unsuccessful.

Students will be assumed to have a solid understanding of corporate finance as well as financial accounting principles, techniques and methods. Completion of AC416 is recommended for this course.

The aim of this course is to introduce students to security analysis and valuation from both theoretical and empirical perspectives. Students are furthermore provided with an opportunity to apply their skills by valuing, in small groups, from the point of view of a "sell-side analyst", a firm's equity of their choice using technologies based on the present values of free cash flows and economic value added. The course should appeal to students interested in investment analysis and fund management.

The course is presented in three parts. The first part, financial analysis, focuses on past and present performance evaluation, which is used by financial analysts to generate expectations about future performance (prospective analysis). The second part, security valuation, focuses on the determination of intrinsic security prices, which, in efficient markets, reflect prospective performance. The third part, returns to fundamental and technical analysis, provides empirical evidence on returns to trading strategies based on either financial analysis or past stock returns.

30 hours of seminars in the LT.

Teaching is delivered in three hour sessions each week. Each session is conducted in groups of about 55 students, often involving case study analyses, individual or group presentations and discussions. This mode of teaching requires good advance preparation by the students; hence, every student should be ready to contribute to the discussion when called upon. Active participation is expected and encouraged.

Lectures are based on Beccalli E and  Frantz, P, Valuation and Securities Analysis, 2017. Other books recommended include Penman S, Financial Statement Analysis and Security Valuation, McGraw-Hill, 2012, as well as Palepu K, Healy B &  Bernard V, Business Analysis and Valuation, South-Western College Publishing, 2012. For background reading for the corporate valuation project: Koller T, Goedhart M & Wessels D, Valuation: Measuring and Managing the Value of Companies, Wiley, 2010, The course also relies on journal articles published in the financial analysis and financial markets literatures.

Exam (70%, duration: 2 hours) in the main exam period.
Project (30%) in the LT.