The overall aim of this course is to equip students with the essential knowledge and skills of financial management and to enable them to assess how these concepts and tools can be applied to policy making and public management.
The primary learning objectives are:
· To build familiarity with the concepts of financial management.
· To develop basic skills for financial assessment and analysis.
· To enhance competence in making investment decisions.
· To gain insights into the financial aspects of globalization.
This course equips students with the fundamental concepts and techniques of financial management with a special focus on their applications and implications for policy making and public management.
The main topics covered in this course include:
· Fundamental Concepts in Financial Management, which includes Time Value of Money, Interest Rates and Bond Rating, Risk and Rates of Return, and Capital Asset Pricing Model.
· Assessment of Business Performance with a focus on financial ratio analysis.
· Valuation of Bonds and Stocks.
· Capital Budgeting.
· Derivatives and Risk Management.
· Mergers and Acquisitions.
· Investment Strategy
· Emerging issues such as securitization and outsourcing
PP5101 or equivalent
The required textbook for this class is:
Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston; Thomson South-western, 10th Edition, 2004 (Referred to as B&H).
This book is available at the NUS Co-op Bookstore.
Required Financial Calculator
Students are required to have a calculator with financial functions for in-class exercises and exams. The BA II Plus calculator (made by Texas Instrument) is recommended. The calculator is available at the NUS Co-op Bookstore and costs about S$50.
Problem sets: There are three problem sets over the semester. The problem sets are designed to enhance your problem-solving and analytical skills.
Group Project: You will be assigned to a group of about 5 students with similar research interests. Your group will work on a Financial Analysis Exercise (FAE) throughout the semester under my close monitoring and guidance (see Annex I for details).
· You are encouraged to raise your questions when I am lecturing and to proactively participate in class discussions.
- Mid-term exam
- When: 2:00-4:00am, March 01, 2007
- Duration: Two hours
- Content: All the materials covered since the beginning of the semester
- Final exam
- When: TBA
- Duration: Three hours
- Content All the materials covered over the semester.
- All the exams are CLOSE BOOK but you are allowed to bring the required text book and a two-sided A4-size sheet of your own notes.
Problem Sets 10%
Group Project: 20%
Mid-term exam: 30%
Final Exam: 40%
· You are expected to be of the highest degree of integrity and to have a deep commitment to learning.
· You are encouraged to form study groups and to work with your fellow students to improve your understanding of the course material.
I/ Book Chapters
From Page to Page
Van Horne, James. 1992. Financial Management and Policy, Prentice Hall, 9th Edition, (Referred to as Van Horne).
Chapter 8: Creating Value through Capital Investment
Lumby, Steve. Investment Appraisal and Financial Decisions. 1994. Chapman & Hall, 5th Edition, (Referred to as Lumby).
Chapter 12: Capital Asset Pricing Model
Giddy, Ian. 2004. Asset Securitization in Asia, New York University
Jensen, Paul. 2004. The Efficiency of Public Sector Outsourcing Contracts: A Literature Review, Melbourne Institute Working Paper Series, The University of Melbourne; Social Science Research Network.
“The 2006 Oversight Systems Financial Executive Report on Risk Management”, Oversight System, http://www.oversightsystems.com/whitepapers/ERM_Report_061506.pdf
· Newspapers: Financial Times; Wall Street Asia, Business Times.
· Internet resources, including:
o Yahoo! Finance (http://finance.yahoo.com/)
o ADB Asian bonds (http://asianbondsonline.adb.org).
o Financial Times (http://www.ft.com)
o Worldwide Stock Exchange
o Bloomberg (http://www.bloomberg.com)
o Business Week Online's Investing (http://www.businessweek.com/investor/stocks.html);
o Market Watch (http://www.irnet.com/);
o Investing In Bonds (http://www.investinginbonds.com/)
o Mutual Fund Investor's Center (http://www.mfea.com/);
CLASS SESSION OUTLINE
· Shopping Session
· Introduction to financial management
· The cost of borrowing, interest rates, and bond rating
B&H, Chapters1, 4
· Business performance evaluation
· Financial statements and financial ratio analysis
· Financial Analysis Exercise (FAE)
B&H, Chapters 2, 3
· The time value of money
· Risk and rate of return
B&H, Chapters 5, 6
· Bond Valuation
· Stock Valuation
B&H, Chapters 7, 8
Lumby, Chapter 12
· Portfolio Theory
· The Capital Asset Pricing Model (CAPM)
· Mid-term exam review
· Adding value through risk management
· Put and Call Options
· Black-Scholes Option Pricing Model.
B&H, Chapter 18
“The 2006 Oversight Systems Financial Executive Report on Risk Management”, Oversight System, 2006.
· Multinational Financial Management.
B&H, Chapter 19
· Mergers and Acquisitions
· Investment strategy
B&H, Chapter 21
· Emerging issues in financial management and implications for policy analysis and public management.
· Final Exam Review
“Asset Securitization in Asia”, by Ian Giddy, New York University, 2004.
“The Efficiency of Public Sector Outsourcing Contracts: A Literature Review”, Melbourne Institute Working Paper Series, The University of Melbourne; Paul Jensen, 2004.
Financial Analysis Exercise: Project presentation.
· Course Summary
· Final Exam Review