Prof Richard Payne and Dr Hongda Zhong

This course is compulsory on the BSc in Accounting and Finance, BSc in Finance, BSc in Financial Mathematics and Statistics, BSc in Statistics with Finance and Diploma in Accounting and Finance. This course is available on the BSc in Actuarial Science, BSc in Business Mathematics and Statistics, BSc in Econometrics and Mathematical Economics, BSc in Economics, BSc in Management, BSc in Mathematics and Economics and BSc in Social Policy and Economics. This course is available as an outside option to students on other programmes where regulations permit. This course is available with permission to General Course students.

(Permission forms from General Course admin office should be submitted to the Department of Finance Student Information Centre OLD.2.04 with a copy of the transcript attached.)

Students must have completed: one level 1 Economics course (either EC100 Economics A or EC102 Economics B), one level 1 Mathematics course and one level 1 Statistics course.

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, derivative pricing, sources of funds, basic theory of capital structure and the cost of capital, company dividend decisions and financial markets and institutions.

20 hours of lectures and 20 hours of classes in the MT. 20 hours of lectures and 20 hours of classes in the LT. 2 hours of lectures and 1 hour of classes in the ST.

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: Principles of Corporate Finance by Richard Brealey, Stewart Myers, and Franklin Allen, McGraw-Hill Inc.

Exam (100%, duration: 3 hours) in the main exam period.