Principles of Finance

This information is for the 2015/16 session.

Teacher responsible

Prof Richard Payne

Dr Hongda Zhong

For enquiries related to this course (including requests to take the course) please contact the Lead Teacher, Dr Paula Lopes (


This course is available on the MPA in European Public and Economic Policy, MPA in International Development, MPA in Public Policy and Management, MPA in Public and Economic Policy, MPA in Public and Social Policy, MSc in Applicable Mathematics, MSc in Financial Mathematics and MSc in Regulation. This course is not available as an outside option.


Students must have completed: one Economics course, one Maths course and one Statistics course at an undergraduate level.

Course content

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.


20 hours of lectures and 20 hours of seminars in the MT. 20 hours of lectures and 20 hours of seminars in the LT. 2 hours of lectures and 6 hours of seminars in the ST.

Formative coursework

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

Indicative reading

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.

Key facts

Department: Finance

Total students 2014/15: 12

Average class size 2014/15: 12

Controlled access 2014/15: Yes

Value: One Unit

Guidelines for interpreting course guide information