306-203 Business Finance

Prerequisite/s:

Timetable:

Contact:

Objectives:

On completion of this subject a student should:

• develop a basic institutional knowledge of the Australian finance sector and understanding of financial information;

• understand, at an introductory level, the theory of pricing of risky assets;

• understand the fundamentals of capital budgeting; including the use of alternative criteria, allowing for inflation, the treatment of risk;

• be aware of the instruments of corporate funding and have a basic understanding of the theory of capital structure;

• appreciate the fundamentals of the theory and practice of dividend policy;

• develop an understanding of the characteristics of, and basic approach to pricing, derivative financial instruments such as options and futures;

• be able to utilise computer spreadsheet techniques to solve financial problems;

• develop basic competence in financial mathematics.

Content:

Basic institutional knowledge of the Australian finance sector and an introduction to the theory of pricing of risky assets, focusing on the Capital Asset Pricing Model. Fundamentals of capital budgeting, including methods of allowing for inflation, the term structure of interest rates, and the treatment of risk. Instruments of corporate funding; the theory and practice of capital structure and dividend policy decisions. An introduction to complex financial instruments such as options and futures.

Assessment:

Prescribed Texts:

• Van Horne J, Davis K, Lawrinsky M and Wachowitz J, Financial Management and Policy in Australia, Prentice Hall Sydney 1994.