What you will study
This module will equip you with the necessary theoretical, applied, and critical skills to navigate financial markets, understand financial instruments, take responsible investment decisions, and understand the methods through which companies can raise finance.
The first part of the module (Units 1 and 2) explores the concept of time value of money, which is critical to astute financial decision making. Building on this knowledge, investment appraisal tools are introduced and applied. Important dimensions of risk and return will be considered, and the trade-off between them will be analysed within the theoretical frameworks of portfolio theory and the Capital Asset Pricing Model. The relevance of the weighted average cost of capital (WACC), in the context of project appraisal and discounting cash flows, will be emphasised.
The second part (Unit 3) provides an overview of the financial markets and instruments with the focus on stocks, bonds, and foreign currencies. More complex financial tools, such as derivatives, will also be considered including financial options, swaps, as well as forward and futures contracts. Underlying the technical description of those financial assets is a reflection on what drives their price formation process. Do prices accurately reflect the fundamental information that is available, or do they instead reflect the behavioural tendencies of traders?
The third part (Units 4 and 5) elucidates the processes through which companies can mobilise the funds required to finance their operations and investments. Equity capital could be raised in a multitude of ways. Traditional approaches typically involved offering of shares on the stock exchange or securing funds from venture capitalists or business angels. More recently, novel methods have emerged including crowdfunding, initial coin offering or fintech. In terms of raising debt finance, you'll analyse the possibilities afforded by bank loans, bonds, money markets, as well as leasing.
In the final unit of the module (Unit 6), you'll acquire skills to understand the financial and other qualitative information provided in the Annual Reports of companies, which are a major source of information for investment analysts, investors, and other stakeholders in an organisation. You'll use financial analysis tools to investigate, interpret, and manage organisational activities and processes. These represent essential skills to be able to assess the financial structure and performance of organisations.
You will learn
By completing this module, you will be able to:
- quantify rewards and risks of investments
- appraise investment projects
- understand how assets interact in an investment portfolio
- apply various methods to estimate the cost of equity, cost of debt and the weighted average cost of capital
- describe and analyse different asset classes including bonds, stocks, currencies, and derivative instruments
- characterise different ways in which organisations could raise debt and equity capital
- understand and interpret financial statements
- analyse company performance
- collate and analyse data relevant to investment decision-making
- use Excel to solve problems related to investing and financial analysis.