Course syllabus - Finance

Objectives

The aim of this course is to analyze a firm's capital decisions, to price bonds and stocks, to explore the return-risk trade-off, and how to price and use some financial derivatives.

Learning outcomes

After completed course the student shall be able to
- explain and calculate present and future values of simple and growing annuities and perpetuities
- explain and use the Net Present Value and the Internal Rate of Return methods to evaluate investment projects
- explain and use simple theories to price stocks and bonds
- explain and show if there is an optimal capital structure with and without taxes
- explain and show how risky returns are priced
- explain and show how optimal stock portfolios can be constructed
- explain and show how options, futures, forwards and duration work, are priced and can be used to minimize risk

Course content

Classical investment rules under no risk. Using the time value of money to evaluate investments and find optimal prices for both bonds and stocks. Modern theory of investment, the Capital Assets Pricing Model and the Arbitrage Pricing Theory. The firm's optimal capital structure and dividend policy under various tax systems. Financial instruments, such as options, futures, forwards, and duration in order to hedge various types of risk of different financial assets.

Tuition

The course is organised in a series of lectures, including some problems solving meetings and two seminars.

Specific requirements

Students must (i) have studied 30 credits in Economics and have passed at least 22.5 credits when the course starts or (ii) have studied 30 credits in Economics and have passed at least 15 credits when the course starts and have also passed 15 credits in Business Administration, provided that at least 7.5 credits are credits in financial and management accounting. In addition, Mathematics (C) and English (B), equivalent to TOEFL test result, minimum score 575 with a TWE score of at least 4,5 (PBT) or 90 with a TWE score of at least 20 (iBT)/IELTS test result with an overall band score of minimum 6,5 and no band score below 5,5.

Examination

Exercise (INL1), 1 credits, marks Pass (G)
Exercise (INL2), 1 credits, marks Pass (G)
Examination (TEN2), 5.5 credits, marks Pass (G) or Pass with distinction (VG)

Students' knowledge is evaluated by a written final examination. Students have access to financial formulae and their calculator.

ECTS grades applied: A, B, C, D, E and F; Pass with distinction (VG), Pass (G) or Fail (U). The final degree is decided by the grades in the written examination.

A student who has a certificate from MDU regarding a disability has the opportunity to submit a request for supportive measures during written examinations or other forms of examination, in accordance with the Rules and Regulations for Examinations at First-cycle and Second-cycle Level at Mälardalen University (2020/1655). It is the examiner who takes decisions on any supportive measures, based on what kind of certificate is issued, and in that case which measures are to be applied.

Suspicions of attempting to deceive in examinations (cheating) are reported to the Vice-Chancellor, in accordance with the Higher Education Ordinance, and are examined by the University’s Disciplinary Board. If the Disciplinary Board considers the student to be guilty of a disciplinary offence, the Board will take a decision on disciplinary action, which will be a warning or suspension.

Grade

Pass with distinction, Pass, Fail

Interim Regulations and Other Regulations

This course overlaps 3 credtis with NAA201 Corporate Finance and 4,5 credits with NAA202 Investment Theory.