Professor Christopher Polk, A453 and Dr Mungo Wilson, A459

Intended for MSc students who are not specialising in Accounting and Finance and who have not previously studied finance to a significant extent. Optional for MSc Regulation and MSc Regulation (Research), MSc Financial Mathematics and MPA Public and Economic Policy/MPA Public Policy and Management/MPA International Development/MPA European Public and Economic Policy.

Students should have taken courses in quantitative methods and economics at an undergraduate level.

This course examines the theory of financial decision-making by firms and examines the behaviour of the capital markets in which these decisions are taken. The topics covered are the theory of capital budgeting under certainty in perfect and imperfect capital markets, portfolio theory, equity and bond markets, the capital asset pricing model, efficient markets, sources of funds, basic theory of capital structure and the cost of capital, company dividend decisions and financial markets and institutions.

40 lectures (FM212) of one-hour MT and LT and 20 classes (FM492.A) of one-hour MT and LT.

Students are expected to produce written work for classes and to make positive contributions to class discussion.

Detailed course programmes and reading lists are distributed at the start of the course. Illustrative texts include: Grinblatt & Titman, Financial Markets and Corporate Strategy (Irwin, McGraw-Hill); Brealey & Myers, Principles of Corporate Finance (McGraw-Hill).

This course is based on a three-hour written examination in the ST.