FINC 6141: Financial Policies
Learning Outcomes
1. Demonstrate an understanding of the goal of financial management, the existence
of agency problems and some methods for resolving agency problems
2. Demonstrate an understanding of Capital Market Efficiency, its different forms
and implication for financial management
3. Demonstrate an understanding and analysis of financial statements for
financial decision-making
4. Demonstrate an understanding of the time value of money and its implications
for financial decision-making
5. Demonstrate an understanding of the risk-return framework of financial
decision-making, the difference between stand-alone and market risks, the
concept, calculation and application of betas in the Capital Asset and other
Asset Pricing Models to make investment decisions
6. Demonstrate an understanding of the valuation of bonds (fixed-rate and zerocoupon), preferred stocks and dividend-paying common stocks with zero,
constant and non-constant growth
7. Demonstrate the following competencies regarding capital budgeting decisions:
understanding of the Weighted Average Cost of Capital and how to compute and
use it in capital budgeting; make capital budgeting decisions (with and without
capital rationing) using techniques like Accounting Rate of Return, Payback,
Discounted Payback, Net Present value, Internal Rate of Return, Modified
Internal Rate of Return and Profitability Index; evaluate risk of capital projects
using the Pure Play Method
8. Demonstrate an understanding of alternate models on the effect of capital
structure on a firm’s value and how to find the optimum capital structure
9. Demonstrate an understanding of alternate models on the effect of dividend
policies on a firm’s value and some practical application of the Residual
Dividend Policy Model
10. Demonstrate an understanding of the relevance of working capital in financial
management; the close relationship between working capital policies and
management and firm valuation; the Cash Conversion Cycle and its application
For the management of the various components of working capital
11. Demonstrate an understanding of Mergers and Acquisitions, and their social,
economic and ethical consequences