COURSE OUTLINE
Code:
Title:
Prerequis
ites
Course
Lecturers
Aims:
Course Value:
MN3365
Strategic Finance
MN104 and MN204
1
Status:
Availability:
Core
Autumn
Recommended:
None
Dr Evangelos Giouvris
To develop a critical understanding of financial links to strategy especially the
enabling characteristics of and limitations of finance in strategic decisionmaking.
This course will provide an overview of corporate finance in both a domestic and
an international setting. We will look carefully at the workings of international
capital markets emphasising the pricing of bonds and equities. We will also
discuss NPV & other investment criteria, risk & return, options and M&A
This course will provide students with a critical understanding and
background to issues that help shape strategic business decision-making. We
would also expect students to be aware that Finance and Business Strategy
operate within a industry and institutional context. The course will explore
the current business context within which finance operates and the factors
that can promote or frustrate strategic outcomes.
Learning
Outcomes:
Assessment:
By the end of the autumn term the student should be able to:
Apply the main principles of financial theory to commercial problems.
Understand the notion and relationship between risk and return.
Understand the valuation of equities, bonds and options and the relative merits
of different approaches.
Discuss the relevance of information efficiency.
Evaluate the consequences of a proposed takeover or merger.
Analyse the current state of financial markets.
This course is assessed by an assignment (essay question) and an exam at the
end of the year. The assignment (deadline: you will be notified in lectures &
seminars) will be discussed thoroughly during the lectures and seminars. You
are required to hand in TWO copies and we strongly urge you to keep a copy
for yourself.
Finally there is a 3 hour exam at the end of the year. Exam questions for this
course are mostly quantitative in nature. The examination tests your ability to
answer computational questions and demonstrate your ability to analyse
results by applying techniques covered on the course. It also allows you to
demonstrate your ability to explain and critically evaluate the techniques and
demonstrate your wider reading in the general subject area. Please have a look
at past exam papers to get an idea of the exercises.
Teaching
&
Learning
Methods
Key
Bibliography
There will normally be a one-hour lecture plus a one-hour workshop every
second week. Lectures start in week 1 of autumn term. The workshops start
the following week (i.e. week 2 of autumn term). Attendance is compulsory!
Autumn term:
Main Textbook:
Brealey, Myers and Marcus. Fundamentals of Corporate Finance,
Mc-Graw Hill, 7th Edition.
Supplementary:
Berk, J, DeMarzo, P & Harford. J (2009) Fundamentals of Corporate
Finance, Pearson International
Brealey and Myers (2005) Principles of corporate finance, McGraw-Hill, 8th
Edition.
Arnold, G, (2005) Corporate Financial Management, London, FT Publishing,
3rd Edition.
In-course
Feedback:
Contact
info.
Formal formative assessment will comprise an assignment (which
requires students to have developed and to demonstrate some
independent research skills). Informal formative assessment will take
place in workshops when students discuss the work they have
undertaken to prepare for the workshop. The essay assignment will be
returned with a standard cover sheet that includes the lecturer’s
comments. Feedback on answers to workshop questions and readings
will be given in the seminars. Students are also welcome to discuss
course-related issues with the lecturer involved during weekly office
hours or by appointment.
Dr Evangelos Giouvris
Founder’s East 134
Tel. 01784 276115
Email: evangelos.giouvris@rhul.ac.uk
Date
Lecture
Autumn Term
Readings
Week 2
Valuation of bonds
Chapters 1, 2 and 5 (chapters
1 & 2 are not presented in the
lecture. It is up to you to read
those two chapters
yourselves. Chapters 1 & 2
are really easy and you
already know those things)
Chapter 6
Week 3
Valuation of stocks
Chapter 7
Week 4
NPV and other investment criteria
Chapter 8
Week 5
Intro to risk, return, opportunity cost
and portfolio diversification
Risk, return and capital budgeting/
CAPM/ efficiency
Valuation of options I
Chapter 11
Week 1
Week 6
Week 7
Week 8
Goals and governance of the firm
(Chapter 1).
Financial markets and institutions
(Chapter 2).
Time value of money (Chapter 5)
Week 9
Valuation of options II: Risk
management
M&A
Week 10
Questions and Answers
Chapter 12
Chapter 23 +extra notes
Chapter 24 + extra notes
Seminar questions/exercises will be given during the lecture
Chapter 21