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    Financial Planning & Decision Making (Elective)

    Track:

    All tracks

    Follow-up / Interfaces

    Int. Economics and Finance

    Pre-requisites:

    Pre-reading and preparation tasks

    Didactics:

    Lecture, group tasks, individual tasks, plenum discussions 

    Exam

    Written exam

    ECTS points

    2

    Lecturer:

    Mr. Michael Thompson


    Aims and objectives:

    Finance is the study of how people allocate scarce resources over time. Costs and benefits are distributed over time, but the actual timing and size of future cash flows are often known only probabilistically. Understanding finance helps the participants to evaluate these uncertain cash flows. Students shall be able to understand and perform basic principles of accounting while also looking at the management side of financial decision making. Important concepts like the absence of arbitrage (law of one price) as the basis for NPV and time value of money will be introduced and used as a connection between theory and practice.

    General learning objectives:

    The participants of the MBA programme should gain particular knowledge in the description and analysis of financial data and the rules for financial decision making.
    Graduates are shown that trying first to analyse a business problem, than to apply theoretical concepts and bench-marked ideas to develop a problem solution, and finally implementing the solution in a change oriented manner is the key approach for any kind of business and management task.

    Detailed learning outcomes:

    • Planning and controlling the activities of a business
    • Understanding the basic principles of accounting and the rules for financial decision making
    • Applying their problem solutions to their business environment

    Course textbook:

    Berk, J., & DeMarzo, P., Corporate Finance, Global Edition, 3rd Edition, Pearson 2014

    Content & structure of Financial Planning and Decision Making:

    The course consists of lectures followed by question and answer sessions where the students will be able to confirm thier understanding of the lecture. Practical examples will be used to confirm this understanding. The table below summarizes the topics to be covered.

    Unit
    No
    TopicTextbook reading
    1Introduction to Financial Statement Analysis1 - 3
    2Time Value of Money and Bond Valuations4 - 6
    3Valuing Projects and Firms7 - 9
    4Risk and Return10 - 13
    5Capital Structure14 - 18
    6Options: Pricing and Use20 - 22
    7Financing the Corporation23 - 27
    8Risk Measurement & Review30

     

    Recommended supplemental readings:

    • Bodie/Merton/Cleeton: Financial Economics
    • Luenberger: Investment Science 
    • JALM: Journal of Applied Management and Leadership
    • Journal of Finance
    • Yahoo! Finance
    • Financial Times
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