Strategic Finance

Title Course Outline

Doc ID Date of Issue 24-02-2020 Revision No. 0

aA. Standard Course Description

Title of Course Strategic Finance

Course Code Credit Hours 3 Hours
School Lahore Business School Program PHC
1. Financial Accounting
2. Business Finance
Prerequisites
3. Financial Management
4. Corporate Finance

B. Semester Description

Semester Spring Year 2020

Course 09:00-12:00 A.M
Sunday Time
Schedule
Faculty Sajid Mohy Ul Din Email sajidmohyuldingsk@yahoo.com
Counseling 2:00-5:00 pm (Wednesday)
Place LBS Faculty Office # 2
Hours 2:00-5:00pm (Thursday)
Admin Officer Email

C. Course Synopsis

This module is designed to develop advanced understanding of the principal theories and
techniques of corporate finance and valuation focusing on: cost of capital estimation,
distribution policy, investment appraisal, international finance, techniques of risk
management, and valuation of corporate entities.

D. Course Objectives

Upon successful completion of this course, students will be able to:

 Appreciate the role of Financial Manager that takes appropriate decisions and helps
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him to develop common language of business to all internal and external users of
financial data.
 Explore how key financial ratios are used to assess the financial health of a firm.
 Recognize how forecasting is used to make financial decisions.
 Have assessment for the solution of basic problem of: what investment to make and
how to pay for that?
 Evaluate different investment proposals keeping in view the concept of time value of
money, risk and returns.
 Evaluate the different types of securities such as common stocks, preferred stocks and
bonds.
 Identify and analyze the key concepts, terminologies and principles of firm operations
and financial markets. Like Cash Budgeting, Cash Management, Credits and
Receivables Management, Inventory Management, International Business Finance.
 Recognize the key ethical ramifications of purposeful accounting decisions.

E. Recommended Text and Other Readings

Textbooks
 Ross, S. A., Westerfield, R., & Jordan, B. D. (2013). Fundamentals of corporate
finance. Tata McGraw-Hill Education.
 Narayanan, M. P., & Nanda, V. K. (2001). Finance for Strategic Decisions. University
of Michigan,Wiley.

Soft-copies of Textbooks, PowerPoint slides, and articles are available at

https://drive.google.com/drive/folders/185NhAr7Wzl0dTFe6ZvNWFn5IH5CorKs-?
usp=sharing

F. Student Evaluation Methods

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Title Course Outline

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S. No Evaluation Criteria Weight

1 Assignments general guidelines
20
 20% deduction on late submissions, no submission is allowed after
1 weeks of deadline
 All assignments will be check for plagiarism and it should not be
more than 20%.
 APA referencing style
 Assignments should be in Time New Roman, Font Size 12,
Justified, and 1.5 Paragraph spacing, Space before and after
paragraph 6 pts.
 Need to show full calculations for numerical questions

Assignment # 01 (4.0)

 Summary of research articles

2  Students are required to watch “Arbitrage” movie and relate the

movie scenes with different concepts taught in the class
(particularly agency theory, signaling theory, asymmetric
information, and ethical perspective in business)

Assignment # 02 (4.0)

 Summary of research articles

Final Project (8.0)

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Students are required a select a topic of their own choice from the field of
finance (or they may request for a topic from instructor) and write 5,000
words (introduction, literature, discussion and con

Presentation (4.0)

 Presentation of final project

Quizzes (5*2)

 There will be three quizzes in total, out of which marks of two

highly scored quiz will be counted in your final grades.
 Quizzes will be Multiple Choices Questions (MCQs)
 Maximum allowed time is 10 Minutes
10

Mid Term Exam

 20 Multiple Choice Questions

 Five short questions
 Two long Questions

Final Term Exam 30

 40 MCQs

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 Five short questions

 1 long questions
 Key findings from your research project (5 Marks)

40
Total 100

G. Schedule of Activities

Week Topics

Introduction

• Key Corporate finance decisions

1
• Agency problem, Cost & Theory

2-3 Long-term Investment Decisions

• Definition and characteristics of long-term projects

• Relevant Vs. non-relevant cost, sunk cost, opportunity cost
• Capital budgeting methods
• Payback Period
• Discounted Payback Period
• Accounting Rate of Return (ARR)

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• Net Present Value (NPV)

• Internal Rate of Return (IRR)
• Profitability Index (PI)

Operating Leverage and Capital Rationing

• Operating Leverage
4 • Capital rationing
• Soft Vs Hard rationing
• Single Vs multi-period capital rationing

Cost of Capital

• Capital structure and financial leverage

• Cost of equity
5-6
• Cost of debt
• Cost of preferred stock
• WACC

Financial Instruments Valuation

• Financing options definition, features, & Characteristics (debt, equity)

7
• Bond Valuation
• Stock Valuation

8 Mid Term Examination

9-10 Risk and Return

• Defining risk & uncertainty

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• Why do individuals invest?

• What is an investment?
• How do we measure the rate of return on an investment?
• How do investors measure risk relate to alternative investments?
• What factors contribute to the rates of return that investors require on
alternative investments?
What macroeconomic and microeconomic factors contribute to changes in the
required rate of return for individual investments and investments in general?

Capital Asset Pricing Model

• What are the assumptions of the capital asset pricing model?

• What is a risk-free asset and what are its risk-return characteristics?
• What is the covariance and correlation between the risk-free asset and a risky
asset or portfolio of risky assets?
• What is the expected return when you combine the risk-free asset and a
portfolio of risky assets?
• What is the standard deviation when you combine the risk-free asset and a
12-13 portfolio of risky assets?
• When you combine the risk-free asset and a portfolio of risky assets on the
Markowitz efficient frontier, what does the set of possible portfolios look like?
• Given the initial set of portfolio possibilities with a risk-free asset, what
happens when you add financial leverage (that is, borrow)?
• What is the market portfolio, what assets are included in this portfolio, and
what are the relative weights for the alternative assets included?
• What is the capital market line (CML)?
• What do we mean by complete diversification?

14 Payout Policy

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15 Final project presentations

16 Final Term Examination

H. Additional Information (if any)

___________ ______________
Course Instructor Head of Department

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