Professor Christopher Polk, OLD 4.32 and Dr Stavros Panageas, OLD M3.10

Compulsory for BSc Accounting and Finance and the Diploma in Accounting and Finance. Optional for BSc Business Mathematics and Statistics, BSc Econometrics and Mathematical Economics, BSc Economics, BSc Management, BSc Management Sciences, BSc Mathematics and Economics, BSc Philosophy and Economics, and BSc Social Policy and Economics. Available as an outside option. Available to General Course students only with permission from the course leader.

Elementary economics and quantitative methods.

The 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 (FM212.A/B/C) 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) or Brealey, Myers and Allen, Corporate Finance (McGraw-Hill).

A three-hour written examination in the ST. Students will answer a total of four questions, two each from Sections A and B.