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Finance I (FIN
219 3.0 Cr)
Business & Management
Course Description
This course presents the fundamental concepts
used in finance, emphasizing basic financial
literacy and the tasks associated with making
responsible financial management decisions.
In addition to addressing sources and uses
of capital and the functions of financial
markets, this course also covers the principles
of time value of money, risk and return, fundamental
aspects of investments including security
and real asset valuation, and the use of financial
accounting information.
Learning Objectives
After completing this course, students will
be able to:
• Describe finance in general and, specifically,
the role of financial management in corporations
and other enterprises
• Identify the purpose and functions
of financial markets and institutions
• Use financial accounting information
in assessing the basic financial health of
a firm
• Apply time value of money principles
to the valuation of financial and real assets
• Explain why and how to adjust for
risk in making investment and financing decisions
Breadth of Assignments
This course uses a variety of methods to explore
the Principles of Finance including: textbook
reading assignments, online Flash-based presentations,
Internet research and case studies, self-assessment
quizzes, collaborative projects involving
problem-solving or discussions with classmates,
individual activities including e-lectures,
writing assignments, journal entry assignments,
and optional essays.
Required Resources
Brigham, E.F. and Houston, J. F. (2004). Fundamentals
of Financial Management (Concise 4th ed.).
Mason OH: South-Western College Publishers,
ISBN 0324-1783-28.
Course Summary
Principles of Finance
Business & Management
Module/Topics
Module 1: Overview of the Financial Infrastructure
• The three major areas of finance
• Advantages and disadvantages of the
forms of business organization
• Goals of stockholders and the principle
of wealth maximization
• The basic purpose and functioning
of financial markets and institutions
• Distinguishing between broad types
of financial markets and securities
• Stock trading venues and mutual funds
• The basic functions of money and capital
markets and the forces that affect market
interest rates
• Yield curves
• Different types of risk and their
impacts on interest rates
Module 2: Accounting Concepts and
Financial Statement Analysis
• Itemizing the information in the income
statement, balance sheet, and statement of
cash flows
• The differences between accounting
income and cash flow and between book value
and market value
• The nature of business enterprise
as reflected by the balance sheet
• Defining financial (ratio) analysis
and explaining its objectives and limitations
• Identifying the various categories
of financial ratios
• Defining and calculating the ratios
within each category
Module 3: Time Value of Money Principles
• Distinguishing between points in time
and periods of time as shown by a time line
• Defining compounding and discounting
• Computing future value or present
value for single payment amounts
• Distinguishing between single payments
and streams of payments and between uneven
streams and annuities
• Solving for the interest rate or time
period for simple present value and future
value problems
Module 4: Risk and Return
• Defining risk
• How risk influences investment decisions
• Calculating risk and rates of return
• How diversification can limit risk
• How diversifiable risk can be lowered
using a portfolio approach
Module 5: Security Valuation
• The basic functions of bonds
• How bond prices behave over time and
how bond prices vary with prevailing interest
rate levels
• Computing market prices for bonds
• Determining the yield to maturity
on a bond
• Differentiating between the various
types of equity securities (stocks)
• Identifying the rights and expectations
of common stockholders
• The nature of various stock market
transactions
• Computing stock values based on expected
future cash flow
Module 6: Valuing Real Assets
• The role of capital budgeting in creating
value for a firm
• Identifying various categories of
capital budgeting projects
• Comparing the capital budgeting process
with the security valuation process
• Using investment selection criteria
(for example, NPV and IRR) to evaluate capital
assets and projects
• Identifying three distinct categories
of cash flows associated with capital budgeting
projects
• How cash flows are impacted by replacement
and expansion projects
• Estimating incremental after-tax cash
flows for a proposed capital project
• Using discounted cash flow techniques
to assess project desirability
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