BUD3 Finance 1: Financial Management

• Topics

  BUD3 Finance 1: Financial Management is taught in the third semester and contributes to the overall theme of understanding how managers make decisions and create value for the firm. BUD3 will focus on the goals of the firm, and the role that corporate managers play in achieving the firm's goals. Furthermore, we will examine how investors and managers make investment decisions and the different valuation methods used in these processes. We will also cover necessary tools and techniques used for decision making, from manual calculations to basic automation and AI tools. The discussion will include corporate governance, time value of money, investment criteria (NPV, IRR, etc.), capital budgeting, stock and bond valuation, and the risk-return tradeoff in the context project evaluation. BUD3 will be an important stepping stone for BUD4.

• Learning outcome

  Upon successful completion of BUD3, students will be able to:

  Knowledge

  • Understand the role of corporate governance in a firm's decision making process.
  • Demonstrate knowledge of the capital budgeting and investment selection process.
  • Understand how financial securities (stocks and bonds) are valued.
  • Understand the risk-return tradeoff firms and investors must consider when making investment decisions.
  • Understand the available tools and their relative strengths and weaknesses.

  Skills

  • Implement theories and models to analyze investments.
  • Calculate the expected returns from a project.
  • Value projects and investments to determine if an investment should be undertaken.
  • Make risk adjustments to forecasts to accurately reflect expected future cash flows.
  • Use basic programming/AI tools to improve and verify analysis.

  General competence

  • Communicate and understand the economic intuition behind a firm's decision making process.
  • Implement the models for real world applications.
  • Exchange views and experiences with other people with a background in the field of business, thereby contributing to good practice.
  • Be aware of potential risks associated with Ai usage.

• Teaching

  The course will consist of lectures and problem solving activities. In each lecture the core topics will first be covered to provide the economics and intuition. Alongside understanding the core topics, we will work through problems together during class to implement the skills being discussed.

• Compulsory Activity

  None.

• Assessment

  Two individual home assignments are given during the semester. Each assignment constitutes 25% of the final grade. Students have approximately two weeks to complete each assignment.

  1 individual in-person oral exam (50%). At least 30 minutes preparation time, at least 10 minutes individual assessment.

• Grading Scale

  A-F.

• Computer tools

  Statistical software will be used throughout the course. The core concepts will be shown in Excel and Python.

• Literature

  Berk, DeMarzo, and Harford. Fundamentals of Corporate Finance, Global Edition.

• Retake

  Retake is not offered in the non-teaching semester. The assessment may be retaken the next time the course is offered.

  For detailed information regarding the retake policy, please visit our website: https://www.nhh.no/en/for-students/examinations/retake-of-exams/ (copy url).