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Syllabus:

Financial Management D, 30 Credits

Swedish name: Financial Management D

This syllabus is valid: 2018-08-20 and until further notice

Course code: 2FE108

Credit points: 30

Education level: Second cycle

Main Field of Study and progress level: Business Administration: Second cycle, has only first-cycle course/s as entry requirements

Grading scale: VG Pass with distinction, G Pass, U Fail

Responsible department: Business Administration

Revised by: Rector of Umeå School of Business and Economics, 2018-05-31

Contents

This finance course is intended for students who want to increase their familiarity with the practical applications of financial management. The four modules provide students with an opportunity to acquire a high level of expertise in central areas of financial management of firms, covering topics such as firm valuation, financing, investments, as well as risk management. While each of the modules cover different aspects of the financial management of companies, module 1-3 constitute the basis for the understanding of the fourth module.
The course is given and examined in English.
  • Module 1. Advanced Financial Statement Analysis and Valuation, 7,5 credits
  • Module 2. Advanced Corporate Finance, 7.5 credits
  • Module 3. Investments, 7.5 credits
  • Module 4. Risk Management, 7.5 credits
The course has a number of goals for the development of generic skills. After completing the course, the student should be able to:
  • analyze and frame problems in the financial area
  • understand and evaluate financial management related issues from an ethical perspective
  • work effectively in team environments
  • plan, conduct, and present investigations, both orally and in writing
Common expected learning outcome:
  • communicate central concepts for the course in English, both orally and in writing
Module 1. Advanced Financial Statement Analysis and Valuation, 7.5 credits
The module aims to provide students with relevant theories, methods and models for valuing companies and their securities, primarily equity (common stock). The module deals with the analysis of financial statement information and the use of this information for business strategy analysis, performance evaluation and investment decisions. Accounting and discounted cash flow approaches to valuation are discussed as are forecasting of dividends, earnings, cash flows and pro forma analyses. During the module, students will also be introduced to the code of academic conduct, e.g. referencing and avoidance of plagiarism and cheating.

Expected learning outcomes:
After successful completion of the module, the student should be able to:
  • value the equity, operations and debt of companies using different valuation approaches/models and financial statement information
  • analyze and reformulate financial statements to identify a firm’s business strategy and value drivers so as to facilitate forecasting and valuation
  • analyze market prices, value drivers and financial measures, e.g., profitability, growth, P/B and P/E ratios, and their relations to estimated fundamental value
  • explain the relations between accounting standards, e.g. IFRS and US GAAP, accounting methods and value
  • integrate environmental, social and corporate governance (ESG) factors into equity valuation
  • describe, recognize and apply the code of academic conduct to the student’s own work.
Focus of instruction:
Learning is supported by lectures, seminars, literature i.e. text book and research articles, cases and projects. Students are expected to take an active part in every aspect of the module.

Examination modes
Examination is based on an individual written exam, a maximum of two withinmodule tests and an individual test concerning an academic perspective. A passing grade is required for each part of the module. The course is given and examined in English. Note as well examination modes below for the course as a whole.

Module 2.   Advanced Corporate Finance, 7.5 credits
The primary purpose of this module is to provide an integrated overview of the most important concepts in Corporate Finance, both in theory and in practise and in some cases even methodologically. The subject extends the student’s knowledge about the context in which corporations operate. Topics to be covered in this module include capital market imperfections and methods developed in finance to control risk and reduce uncertainty in the financial management of corporations. Issues in corporate policy and strategy, based on theoretical developments in finance are presented. Students will learn the processes involved in the valuation of debt and equity and the methods that have been used to manipulate external perceptions of business outcomes.During the module, students will also be introduced to methods of working in international teams.

Expected learning outcomes
After completing this module, the student should be able to:
  • assess the impact of information asymmetry on corporate financial policy decisions from the selection of particular modes of financing to dealing with the problems associated with financial distress
  • explain the theoretical basis and applicable strategies applied in regard to issues of corporate control
  • compare and contrast leverage strategies in ideal versus real capital markets and be able to explain the expected impact of alternative taxation systems on the use of debt in a firm’s capital structure
  • argue for optimal levels of corporate debt and/or equity and be able to value an offering of either, under different financing strategies
  • formulate and logically defend a position in regard to current issues, such as corporate control and governance, which confront corporations today
Focus of instruction
Learning is supported by lectures, as well as in smaller group workshops and seminars.

Examination modes
Examination is based upon a written comprehensive individual exam and group assignments. A passing grade is required for each part of the module. Note as well examination modes for the course below.

Module 3. Investments, 7.5 credits
Students undertaking the Investments module are provided with an opportunity to learn relevant theories and models to acquire a specialization at an advanced level in investment analysis. In the module fixed income securities are reviewed in terms of valuation and portfolio management. This includes coverage of concepts as duration analysis, convexity and immunization. Derivative securities (options, futures, swaps and convertibles securities), their pricing and relevant parity-relationships are emphasized and studied within the module. The creation of synthetic securities and the construction and maintenance of various hedging strategies for both portfolios and individual securities using different derivatives are also discussed. The concept of Value at risk, an essential tool for modern risk management, is further covered in the context of investment management. The module, finally, also include coverage of portfolio management strategies and measurement of portfolio performance.

Expected learning outcomes
After completing the module, the student should be able to:
  • value fixed income securities and measure their associated risk.
  • analyze active and passive portfolio management techniques to fixed income securities
  • explain and analyze the development of regulation for financial institutions
  • calculate and apply value at risk (VaR), as well as, perform backtesting for individual securities and portfolios
  • value derivatives and explain the use of these in hedging investments and their impact on potential return and risk
  • evaluate portfolio performance using, for example, risk-adjusted metrics
Focus of instruction
Learning is supported by lectures, although seminars, cases and computer exercises utilizing Excel may also be used. Students are expected to play an active role in every aspect of the course module.

Examination modes
Examination is based upon a written comprehensive individual exam and group assignments. A passing grade is required for each part of the module. Note as well examination modes for the course below.

Module 4. Risk Management 7,5 credits
A general principal in finance is that there is a trade-off between expected return and risk. Minimizing the cost of risk to an optimum level unanimously means increasing the value of a firm. Much has happened in financial markets that has highlighted the importance of risk management in financial institutions. The module covers traditional risks such as market and credit risks, and then focuses on recent developments regarding liquidity, operational and model risks. It combines discussions around the concepts and mathematical approaches of volatility and Value at Risk and also highlights the role of trading, regulations and innovations. Students are focused on the way risks are managed by financial institutions, but many of the ideas are equally applicable to all kinds of businesses. The module contents are aligned with the FRM Certification, Exam Part 1, delivered by the Global Association of Risk Professionals (GARP)

Expected learning outcomes
After completing the module, the student should be able to
  • integrate knowledge from a broad range of risk management concepts and techniques
  • analyse the effects of Basel III and other types of regulation.
  • demonstrate analytical and integrative skills in solving advanced tasks within strategic risk management
  • produce detailed and coherent reports in matters related to assessing risk management in real-life financial institutions.
  • understand and apply ethical/professional rules in learning and conduct
  • evaluate own competence and own need for competence development in order to work with financial management
Focus of instruction
Learning is supported by lectures, seminars, case studies, guest lectures, with bank managers and course papers. The core topics will be covered by lectures and seminars, in which students will be expected to take an active part. Cases related to the topics will also be used. Students are required to make oral presentations at seminars and during case analyses and to submit written course papers. Students will write an individual reflection paper in which they will assess their current performance and identify their needs of further knowledge.

Examination modes
Examination is based upon a written individual exam and group assignments (written and/or orally). A passing grade is required for each part of the module. Note as well examination modes for the course below.
 

Expected learning outcomes

See each separate module.

Required Knowledge

90 credits with a minimum of 75 credits in Business Administration. At Basic level (A-level) and Intermediate level (B-level) a minimum of 60 credits in Management, Marketing, Accounting and finance.  At the C-level (Bachelor), a minimum 15 credits. At least 7,5 credits in Finance courses. Statistics or similar 7.5 credits.

Proficiency in English equivalent to Swedish upper secondary course English B or the equivalent.

Form of instruction

See each separate module.

Examination modes

See each separate module and below.
 
The following grading system is used:
Pass with distinction (Väl godkänd, VG, 75% or more),
Pass (Godkänd, G, 50% or more)
and Fail (Underkänd U, less than 50%).
 
Grades on the course are awarded when the student has passed all examinations and compulsory course elements. The course is given and examined in English.
To receive the grade Pass with distinction (VG) in the 30 credits course consisting of four modules of the same size, the student must have achieved Pass with distinction (VG) in at least three out of four modules. In shorter courses for example 7,5 credit courses, 15 credit courses or 22,5 credits courses Pass with distinction (VG) is given when the student has achieved at least 75% of the total weighted points.
 
A student who does not pass at the time of the written examination will be offered an opportunity to sit a further examination within two months. Beyond that, additional examination opportunities normally arise every academic year, one week prior to the start of the autumn term. If required by specific circumstances, the Director of Studies may decide on other forms of examination

In case of failure on seminar participation or individual and group assignments, compensating assignments must be completed in accordance with instructions given, no later than two weeks after the completion of the module. Mandatory assignments (seminars, written assignments, cases, computer assignments etc.) that have not been handed in within stipulated time must be done the next time the course is offered. If the form of examination does not permit repetition other forms of re-examination may be used.
 
When a student has failed an examination on two occasions, he or she has a right to have another grading teacher. A written request for an alternative examiner should be handed to the director of studies no later than two weeks before the next examination opportunity.
 
A student who has passed an examination can not redo the examination to get a higher grade.
 
If a student fails to present a photo ID at the occasion of a written exam in an exam room will not be allowed to take the exam.
 
Disciplinary action may be taken against students who uses unauthorized help aids or in some other way tries to mislead on a test or when another type of task is being evaluated. Rules and regulations concerning the production of academic texts and correct referencing will be applicable to all written assignments. (see instructions in the thesis manual, Thesis Writing in Business Administration). Urkund records may be used for control. In addtion, Umeå University rules and regulations  for education and research applies:  http://www.umu.se/regelverk/utbildning-pa-grund--och-avancerad-niva
 
Educational activities are designed to facilitate students towards achieving expected learning outcomes and can explain, supplement and provide contrast to the course literature and other relevant course materials.
 

Other regulations


Academic credit transfers are according to the University credit transfer regulations.

Literature

Valid from: 2018 week 34

Module 1

Penman Stephen H.
Financial statement analysis and security valuation
5th ed. : New York : McGraw-Hill Higher Education : 2012 : 740 s. :
ISBN: 978-0-07-132640-7 (pbk.)
Mandatory
Search the University Library catalogue

Module 2

Principles of corporate finance
Brealey Richard A., Myers Stewart C., Allen Franklin
12th ed., International student ed. : New York : Mcgraw-Hill : cop. 2017 : 974 s. med var. pag. :
ISBN: 1-259-25333-3
Mandatory
Search the University Library catalogue

Module 3

Investments and portfolio management
Bodie Zvi, Kane Alex, Marcus Alan J.
Global ed., 9. ed. : New York : McGraw-Hill/Irwin : cop. 2011 : 1022, 14, 20 s. :
ISBN: 978-0-07-128914-6 (pbk.)
Mandatory
Search the University Library catalogue

Module 4

Hull John Risk Management and Financial Institutions 5th Edition : Hoboken, N.J. : John Wiley & Sons : 2018 : 832 s. : ISBN: 978-1-119-44811-29781118955949(paper or e-book) Mandatory

Reference literature: Hull John (2014). Options, Futures and Other Derivatives, 9th edition, Pearson Prentice Hall. Miller Michael (2013). Mathematics and Statistics for Financial Risk Management, 2nd edition, Wiley & Sons. Malz Allan (2011). Financial Risk Management: Models, History and Institutions. Wiley & Sons. Sanders Anthony and Millon Cornett Marcia (2014). Financial Institutions Management: A Risk Management Approach. 8th edition, McGraw-Hill.

Course reference literature

Umeå School of Business, Economics and Statistics USBE. Thesis writing in Business Administration. Thesis manual. (latest edition)
USBE Business Administration :
https://www.umu.se/en/student/usbe/thesis-and-degree-project-work/