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FINC12-200: Fundamentals of Finance May 2020 [Standard]

General information

An introduction to the analytical approaches corporate managers use in making financial decisions to maximise firm value. The theory and application of fundamental concepts of time value of money, the relationship between risk and return (i.e., CAPM), portfolio theory of investment (i.e., diversification), and capital structure are examined in detail. You will apply these concepts and assorted financial tools to value stocks and bonds, estimate the cost of capital and implement the discounted cashflow technique to make capital budgeting decisions. You will also demonstrate competence with Bloomberg Market Concepts.

Details

Academic unit:Bond Business School
Subject code:FINC12-200
Subject title:Fundamentals of Finance
Subject level:Undergraduate
Semester/Year:May 2020
Credit points:10

Delivery & attendance

Timetable: https://bond.edu.au/timetable
Delivery mode:

Standard

Workload items:
  • Lecture: x12 (Total hours: 24) - Weekly Lecture
  • Computer Lab: x12 (Total hours: 24) - Weekly Laboratory
  • Personal Study Hours: x12 (Total hours: 72) - Recommended study time & reviewing materials
Attendance and learning activities: Attendance at all class sessions is expected. Students are expected to notify the instructor of any absences with as much advance notice as possible.

Resources

Prescribed resources:
  • R. Charles Moyer,James R. McGuigan,Ramesh P. Rao (2017). Contemporary Financial Management. 14th, Cengage Learning
  • The Texas Instruments BAII Plus or the Texas Instruments BAII Plus Professional is the recommended calculator for this course. Due to the 202 semester offering being remote delivery, students may use an online financial calculator, smartphone application,. [REQUIRED: Financial Calculator]
[email protected] & Email:[email protected] is the online learning environment at Bond University and is used to provide access to subject materials, lecture recordings and detailed subject information regarding the subject curriculum, assessment and timing. Both iLearn and the Student Email facility are used to provide important subject notifications. Additionally, official correspondence from the University will be forwarded to students’ Bond email account and must be monitored by the student.

To access these services, log on to the Student Portal from the Bond University website as www.bond.edu.au

Enrolment requirements

Requisites: ?

Nil

Assumed knowledge:

Assumed knowledge is the minimum level of knowledge of a subject area that students are assumed to have acquired through previous study. It is the responsibility of students to ensure they meet the assumed knowledge expectations of the subject. Students who do not possess this prior knowledge are strongly recommended against enrolling and do so at their own risk. No concessions will be made for students’ lack of prior knowledge.

Assumed Prior Learning (or equivalent):

Restrictions: ?

Nil

Assurance of learning

Assurance of Learning means that universities take responsibility for creating, monitoring and updating curriculum, teaching and assessment so that students graduate with the knowledge, skills and attributes they need for employability and/or further study.

At Bond University, we carefully develop subject and program outcomes to ensure that student learning in each subject contributes to the whole student experience. Students are encouraged to carefully read and consider subject and program outcomes as combined elements.

Program Learning Outcomes (PLOs)

Program Learning Outcomes provide a broad and measurable set of standards that incorporate a range of knowledge and skills that will be achieved on completion of the program. If you are undertaking this subject as part of a degree program, you should refer to the relevant degree program outcomes and graduate attributes as they relate to this subject.

Find your program

Subject Learning Outcomes (SLOs)

On successful completion of this subject the learner will be able to:
  1. Explain the key issues faced by corporate financial managers and the analytical approaches required to resolve these issues to maximise firm value.
  2. Apply time value of money concepts using formulae and financial calculators to value bonds and common stocks.
  3. Explain the risk/return trade-off using examples from Portfolio Theory, the Capital Asset Pricing Model and the relationship between a firm and the capital markets.
  4. Demonstrate competence using Bloomberg Market Concepts.
  5. Apply concepts of cash flow analysis, evaluation techniques and the cost of capital to make a sound capital budgeting decision.

Assessment

Assessment details

TypeTask%Timing*Outcomes assessed
Online Quiz Time Value of Money Concept Test consisting of short answer with calculations. 15% Week 4 2.
Online Quiz Bloomberg Market Concepts (BMC) quiz covering four modules — Economics, Currencies, Fixed Income and Equities. 10% Week 11 4.
Computer-Aided Examination (Open) Final Examination consisting of short answer with calculations and applied quantitative analysis of managerial problems requiring recommendations. 40% Week 13 1, 2, 3, 5.
Computer-Aided Examination (Open) Mid-semester Examination (weekend of Week 6) consisting of short answer with calculations and applied quantitative analysis of managerial problems requiring recommendations. 35% Week 6 (Mid-Semester Examination Period) 1, 2, 3.
  • * Assessment timing is indicative of the week that the assessment is due or begins (where conducted over multiple weeks), and is based on the standard University academic calendar
  • C = Students must reach a level of competency to successfully complete this assessment.

Assessment criteria

High Distinction 85-100 Outstanding or exemplary performance in the following areas: interpretative ability; intellectual initiative in response to questions; mastery of the skills required by the subject, general levels of knowledge and analytic ability or clear thinking.
Distinction 75-84 Usually awarded to students whose performance goes well beyond the minimum requirements set for tasks required in assessment, and who perform well in most of the above areas.
Credit 65-74 Usually awarded to students whose performance is considered to go beyond the minimum requirements for work set for assessment. Assessable work is typically characterised by a strong performance in some of the capacities listed above.
Pass 50-64 Usually awarded to students whose performance meets the requirements set for work provided for assessment.
Fail 0-49 Usually awarded to students whose performance is not considered to meet the minimum requirements set for particular tasks. The fail grade may be a result of insufficient preparation, of inattention to assignment guidelines or lack of academic ability. A frequent cause of failure is lack of attention to subject or assignment guidelines.

Quality assurance

For the purposes of quality assurance, Bond University conducts an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.

Study information

Submission procedures

Students must check the [email protected] subject site for detailed assessment information and submission procedures.

Policy on late submission and extensions

Each assessment piece must be completed by the due date as advised in the subject outline.

Policy on plagiarism

University’s Academic Integrity Policy defines plagiarism as the act of misrepresenting as one’s own original work: another’s ideas, interpretations, words, or creative works; and/or one’s own previous ideas, interpretations, words, or creative work without acknowledging that it was used previously (i.e., self-plagiarism). The University considers the act of plagiarising to be a breach of the Student Conduct Code and, therefore, subject to the Discipline Regulations which provide for a range of penalties including the reduction of marks or grades, fines and suspension from the University.

Bond University utilises Originality Reporting software to inform academic integrity.

Feedback on assessment

Feedback on assessment will be provided to students within two weeks of the assessment submission due date, as per the Assessment Policy.

Disability support

If you have a disability, illness, injury or health condition that impacts your capacity to complete studies, exams or assessment tasks, it is important you let us know your special requirements, early in the semester. Students will need to make an application for support and submit it with recent, comprehensive documentation at an appointment with a Disability Officer. Students with a disability are encouraged to contact the Disability Office at the earliest possible time, to meet staff and learn about the services available to meet your specific needs. Please note that late notification or failure to disclose your disability can be to your disadvantage as the University cannot guarantee support under such circumstances.

Additional subject information

As part of the requirements for Business School quality accreditation, the Bond Business School employs an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.

Subject curriculum

An introduction to the role of the financial manager, forms of business organisation and the larger environment in which businesses operate. Consideration will be given to the relationship of managerial finance to economics, accounting, and the goal of the firm.

Introduces the role of time value in finance, the use of computational tools, and the basic patterns of cash flow. You will calculate the future value and the present value for single amounts and for cash flow streams and understand the effect of compounding frequency on future value.

Introduces the meaning and fundamentals of risk, return, and risk preferences. You will learn procedures for measuring the risk of a single asset and a portfolio, in terms of correlation and diversification. You will explore the capital asset pricing model (CAPM) and its relationship to the security market line (SML).

Introduces the general features and rights of bonds and stocks and the differences between debt and equity. You will apply the basic valuation model to bonds, preferred stock and common stock. Consideration will be given to the impact of required return and time to maturity on bond values and the growth rate on stock values when using the dividend discount model.

Introduces the rationale for capital budgeting and steps in the capital budgeting process. You will determine the relevant cash flows to make decisions for acquiring new facilities, new products and expanding existing lines. Consideration will be given to the importance of risk in the capital budgeting process.

Introduces the key assumptions that underlie cost of capital and the specific sources of capital it includes. You will apply these fundamentals to calculate the cost of debt and equity and apply alternative weighting schemes to determine a firm’s weighted average cost of capital (WACC). You will explore how the WACC can be used to make corporate financing and investment decisions.

Approved on: Apr 28, 2020. Edition: 4.8
Last updated: Aug 26, 2020.