Finance I – BBA Pokhara University (PU) | Fourth Semester Syllabus

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Business FinancePokhara University (PU)
Finance I – Syllabus
BBA (Bachelor of Business Administration)
For: Second Year | Fourth Semester
FIN 101.3 | Credit Hours: 3

Course Objectives:
The two core courses on Finance, Finance I and Finance II, aim to provide students with basic understanding of important concepts in finance and investments. For students choosing to specialize in finance, the two core courses give them solid foundation. For students choosing to concentrate on other areas of management, the two core courses equip them adequately to understand financial decisions and communicate effectively with finance managers or finance professionals.

Course Contents:

  1. Earnings and Cash Flow Analysis: 3 hours
    Inadequacy of accounting numbers; Emphasis on Free Cash Flow; Interpretation of Financial Ratios.
  2. Liquidity and Working Capital Management: 3 hours
    Working capital and its components; Cash conversion cycle; Managing cash, inventories, and receivables.
  3. Concepts of Return and Time value of Money: 9 hours
    Compound interest, compounding frequency and their implication on future values of an investment; Periodic interest rate and effective annual interest rate; Discounting and present values of cash flows; Valuation of level and growth perpetuities, annuities; Nominal return, inflation, and real return; Nominal and real interest rate/ discount rate.
  4. Introduction to Concept of Risk: 9 hours
    Concept of Expected Value, Variance, Standard Deviation, and Covariance of Returns; Limitation of Variance as a measure of risk; Normal distribution and adequacy of expected return and variance.
    Concept of diversification; Use and limitations of diversification in risk reduction; Market versus unique risk; Assets versus portfolio risk.
    Capital Asset Pricing Model (CAPM) and beta as a measure of asset risk.
  5. Valuation of Default Risk Free Bond: 6 hours
    Price and yield relationship of a bond; Price risk of a default risk free bond; Coupon rate and price risk; maturity and price risk.
  6. Valuation of Common Stock: 6 hours
    Book value, Liquidation value, Replacement Cost Value, Dividend Discount Model of stock valuation. Growth stocks and income stocks; Earning per share and P/E multiple; growth, reinvestment, ROE and stock Price; Market Efficiency and Stock Price Behavior
  7. Capital Investment Decisions: 6 hours
    Superiority of Net Present Value (NPV) over pay back period, accounting rate of return, internal rate of return (IRR), discounted payback period, and profitability index.
    Estimating cash flows: sunk cost, opportunity cost, cannibalization, sales creation and the concept of incremental cash flows.
    Capital Replacement Decision; Optimal Timing of Investment; Comparing investment with different lives; Capital Rationing Problem. Sensitivity and Scenario analysis;
  8. Capital Structure and Theories of Capital Structure: 6 hours
    Modigliani and Miller’s (MM) irrelevance proposition of Capital Structure; Static Tradeoff Theory of Capital Strucuture; Pecking Order Theory; Impact of debt on incentive and agency problems.Cost of Capital and Weighted Average Cost of Capital

Text Book:

  1. Brealey, R.A., Myers S.C., Marcus A.J.: Fundamentals of Corporate Finance, McGraw- Hill International edition.

Reference Books:

  1. Brigham, E.F., Gapenski, L. C., and Ehourhardt: Financial Management: Theory and Practice, Harcourt College Publication, 9th edition.
  2. Van Horne, J.C., and Wachowicz, JR.: Fundamentals of Financial Management, Prentice- Hall India Ltd.

Posted By : MeroSpark | Comment RSS | Category : Bachelor Level, Pokhara University
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One Comment

  1. Aneel
    Posted January 11, 2017 at 5:15 pm

    with the help ur post i had complete my exam. thanks for note

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