This module aims to build on the theoretical and practical knowledge gained in Financial Management and give students an appreciation of the key strategic issues affecting company finances.
Valuation of shares and bonds,
Discounted present value techniques /Valuations of bonds and bond management/ Share and company valuation using various techniques. The trade off between risk and return
Cost of capital and capital structure
Cost of different sources of capital, weighed average cost of capital, Capital asset pricing model, theories of capital structure including Modigliani and Miller and the Traditional theories. Real World influences on Capital Structure and the impact of changes in the cost of capital of an enterprise.Business and financial risk. Impact of high leverage. The effect of corporate taxes. Trade off , Signalling and Pecking Order theories.
Portfolio theory and Efficient Market Theory
Expected Returns and standard deviations /Correlation and covariance /Investor preferences /Risk free investments/Capital Market Line/Diversification/Practical Application of Portfolio Theory/Problems with Portfolio Theory/Theory and impact of Efficient Market Theory/
Risk management
Risk Policy formation. Risk management systems. Distinguish between risk mitigation, hedging and diversification strategies. Incorporate risk into corporate decisions. Impact on financing.Introduction to foreign exchange risk. Risk management tools [including Matching receipts and payments / Matching assets and liabilities/ Netting/Money Markets/ Forward/ Futures / Options / Swaps]. Transaction/ Translation/Economic risks .
Dividend policy
Dividend payment sequence and form. Dividend growth model Dividend policy debate Resolutions to the dividend controversy. Traditional ‘Bird in hand’ theory. M & M dividend as a residual theory. Signalling and Clientele effects. Share repurchase and impact on shareholder wealth. Real world dividend policy decision.
Mergers and acquisitions
Valuation and payment methods (cash, shares etc.) Position of each shareholder type and lenders. Regulation. Post acquisition integration and management. Identifying financial distress. Di-vestments/ De-mergers/ sell-offs/ spin-offs/Management Buy Outs. Role of Venture Capitalist. Impact on stakeholders. Post Acquisition integration
| Module Content & Assessment | |
|---|---|
| Assessment Breakdown | % |
| Formal Examination | 70 |
| Other Assessment(s) | 30 |