University of Derby Derby Business School _______________________

MODULE HANDBOOK

INVESTMENT DECISIONS IN ECONOMICS AND FINANCE

Module Code: 5EC006 LEVEL 5

Lecturer: Dr. Ian Chen Room E316 e-mail: i.chen@derby.ac.uk

MODULE OUTLINE
Module Title: INVESTMENT DECISIONS IN ECONOMICS AND FINANCE 15 5

No of Credits: Credit Level: Mandatory Pre-requisite: Pre-requisite: Co-requisite: Module Description

None None None

The module aims to develop students ability to cope with financial and economic data for decision-making purposes. The module will cover the analytical tools and relevant theory in finance and economics necessary for students to understand, analyse, manage and apply data to business and investment decision making processes. The module will focus on the foundations of investment appraisal, capital budgeting, risk and return, the preliminary asset pricing theory and cost of capital. This module aims to make students confident to handle financial information and economic data to support decisions at both operational and strategic levels.

LEARNING OUTCOMES
On completion of this module the student will be able to: 1. Develop skills in information handling, research and critical evaluation in the analysis of business and financial markets. 2. Demonstrate an understanding of the relevant financial economic theory. 3. Utilise and analyse financial information to support business operational decisions. 4. Demonstrate and assess the implications of different financial management decisions.

INDICATIVE CONTENT
Section 1 Sources of finance Net present value Investment appraisal Capital budgeting techniques

Section 2 Model of risk and return Modern portfolio theory Cost of capital The agency problems

TEACHING & LEARNING STRATEGY

On Campus Students The module will channel the teaching & learning via a 1-hour lecture and 1 hour seminar session. The seminars will be interactive sessions encouraging learning through participation. In some instances as a means of enhancing other necessary skills, such as communication, presentation, use of references etc, and as a means of attaining a better understanding of the materials being studied in this module, the students will be required to lead the session themselves, the tutor will be present to provide guidance and focus where necessary. The aim of the weekly sessions is to help and encourage learning; questions will be set on a weekly basis, thus providing a platform for discussion. The discussion itself and the approach taken by the student in attempting to answer the questions will form the basis of the learning process. The module is further supported by a range of online resources. Learning time: Lectures: Seminars: Directed & Self-directed learning: Total: E-Learning Students E-learning students will be supported through electronic material. In addition, elearning students will have access to the same lecture slides and tutorial activities as given to on-campus students. They will also undertake comparable assessment activities.

12 weeks x 1 hour 12 weeks x 1 hour 126 hours 150 hours

ASSESSMENT STRATEGY
Assessment Weighting: 100% CW

CW1: 50% weighting Learning outcome to be assessed: 1 and 2 Computer based test of knowledge and measurement. The computerised assessment will be held in week 8 of the module. The specified dates and times will be announced on UDO. CW2: 50% weighting Learning outcome to be assessed: 3 and 4 Students will be given a case study / scenario based assessment, requiring them to focus on the economic and financial data for decision making purposes. They will need to apply their broader knowledge in a practical manner. Aid stratgic decisions

faced by real companies, using the support of literature and academic theory. Detail of the coursework assessment will be given during lectures and on UDO.

RESOURCES
The core textbook for the course, which all students are advised to purchase as the base of their reading material: Brealey, R.A., Myers, S. C. and Allen, F. Principles of Corporate Finance (9th Edition), McGraw Hill, 2008, ISBN 978-007-126675-8. Students should also read the relevant chapters of the following book which offers a different and critical perspective to the main text: Hiller, D., Ross, S.A., Westerfield, R.W., Jaffe, J. and Jordan, B.D. Corporate Finance: European Edition, McGraw Hill, 2010, ISBN 978-007-712115-0

LECTURE OUTLINE
1. Course Introduction Reading: Brealey Ch.1,2; Hiller Ch.1 2. Net present value Reading: Brealey, Ch.2,3; Hiller, Ch.4 3. Valuing Bonds Reading: Brealey, Ch.4; Hiller, Ch.5 4: Valuing Stocks Reading: Brealey, Ch.5; Hiller, Ch.5 5: Capital Budgeting Techniques Reading: Brealey, Ch.6; Hiller, Ch.6 (The mock test will be posted on UDO in this week) 6: Capital Budgeting and NPV Reading: Brealey, Ch.7; Hiller, Ch.7 7: Revision The aim of this lecture is to provide a support session on the computerised test 8: Risk and Return Reading: Brealey, Ch.8; Hiller, Ch.9 (There is no tutorial this week, and the computerised test will be held in this week) 9: Modern Portfolio Theory Reading: Brealey, Ch.9; Hiller, Ch.10

10: Cost of Capital Reading: Brealey, Ch.10; Hiller,Ch.12 11: Agency Problems Reading: Brealey, Ch.13; Hiller, Ch.2 12: No lecture.

WEEKLY TUTORIAL CLASSES

The classes are designed to help you do regular work and prepare you for the computerised assessments. Classes start in week 2. The answers to each set of class questions are available on UDO two week after the relevant lecture. (One week for self-study and answering the questions, and the answers will be available in the following week.) This is to help you learn how to use the techniques to analyse a real data set. Policy on calculators Students are suggested to have financial calculator when performing calculations for tutorial questions. You should have access to a financial calculator and you will be allowed this calculator in the computerised test. Preparing for tutorial classes You should aim to have answers available before the relevant class. Remember, you could use Excel or financial calculator to speed up the calculation for questions.

REGULATIONS
The module conforms fully to the relevant UG regulatory framework. UNIVERSITY PARTICIPATION POLICY: A WARNING! Be aware that this module adopts the University Participation Policy as part of the code of conduct for students. A register is taken in all classes. If you are absent from classes, this will be noted. You are required to attend timetabled classes, participate in class work and to submit assessed work by the given deadlines. We will invoke the policy if: you do not attempt pieces of assessed work you do not meet deadlines without providing an extenuating circumstances form and appropriate support evidence

As a result of invoking the policy, you may fail the module. Please refer to www.derby.ac.uk/regs for important information change to the Academic Regulations.