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# Theory of Finance

2022/2023
ENG
Instruction in English
3
ECTS credits
Course type:
Elective course
When:
2 year, 3 module

### Course Syllabus

#### Abstract

It is an introductory course to the theory of finance. The course starts with discussing the basics terms such as the cashflows, NPV, and progresses towards more advanced topics. It also discusses empirical puzzles and practical applications of the financial concepts. After mastering this course, the students will gain initial knowledge on the theory of finance and will be able to apply it in solving some simple real life problems.

#### Learning Objectives

• To know theories of finance and their appropriate applications
• To critically analyze the given problem and to derive comprehensive solutions for the given problem
• To identify a problem and select appropriate models to solve it

#### Expected Learning Outcomes

• To know basic financial concepts
• To build financial models of the projects and firms

#### Course Contents

• Introduction
• Financial Mathematics
• Valuation of Bonds
• Valuation of Common Stocks
• Introduction to Risk and Return Trade off
• Portfolio theory and CAPM
• Cost of capital

#### Assessment Elements

• Minor test 1
Smaller test to estimate the knowledge of the topics covered in the several previous classes. It is conducted online using SmartLMS system.
• Minor test 2
• Minor test 3
• Major test
The objective of the test is to estimate the knowledge of the topics covered during the first 5-6 weeks of the course. It is conducted online using SmartLMS system.
• Home work
The individual assignment designed to let students apply knowledge they gained on the course to solve real world financial problem. It will be conducted in MS Excel spreadsheet and collected through SmartLMS. The detailed instructions will be provided to the students during the course.
• Final exam
The final exam is a test with questions that cover the entire course. It is conducted online using SmartLMS system.

#### Interim Assessment

• 2022/2023 3rd module
0.25 * Major test + 0.04 * Minor test 3 + 0.4 * Final exam + 0.25 * Home work + 0.03 * Minor test 2 + 0.03 * Minor test 1

#### Recommended Core Bibliography

• Richard Brealey, Stewart Myers, & Franklin Allen. (2020). ISE EBook Online Access for Principles of Corporate Finance: Vol. Thirteenth edition. McGraw-Hill Education.