FIN 401: Financial Management

School of Business Studies, IBA Karachi

Program: BS - Accounting and Finance
Department Offering: Finance
Class ERP Number: 6620, 6622 & 6623
Faculty: Dr. Nauman J. Amin

Class details

Class Timing and

See Portal
Room

Session Days See Portal

Credit Hours: 3 Credit Hours

Email namin@iba.edu.pk
Counselling hrs TBD

Course Description

The course is designed to provide the undergraduate students with a deeper understanding of how
firms finance, invest and manage themselves in the real world. It continues from basic topics covered
in introductory business finance course, this course moves on to explain how specific techniques and
decision rules can be used to maximize the value of the firm.

BSAF Program Learning Goals

1. Communication Skills
Students will become effective speakers, listeners, writers and team members

2. Knowledge of All Business Disciplines

Students will gain a broad based understanding of a range of business disciplines

3. Critical Thinking
Students will develop the ability to classify, analyze and evaluate the available data using
appropriate techniques for effective decision making.

4. Ethics
Students will have an awareness and understanding of ethical issues.

5. Glocal Mindset
Students will develop a focus on global connections with local contexts through awareness of
diversity across cultures and markets.
 Course Learning Outcomes (CLOs)

1. Calculate the expected return and risk for a portfolio of two assets and explain the minimum-
variance and efficient frontiers.
2. Calculate the value of the common stock using the dividend discount and free cash flow
models.
3. Compute the annual cash flows for an expansion and a replacement project and evaluate
and select the optimal capital project.
4. Discuss the MM propositions concerning the capital structure and explain the impact of
leverage, taxes, financial distress, and agency costs on a company’s cost of equity, cost of
capital and optimal capital structure.
5. Compare and contrast different theories of dividend policy and discuss the factors which
affect the dividend payout.
6. Students should be able to critically analyze data using appropriate techniques. (LG302)

AOL Assessment Mapping

PLG mapped: The course is mapped with BBA/BSAF program learning goal LG3 and Program learning
objective LG302
Assessment Tool: Quiz/ Term Exam

Teaching and Learning Methodology

1. Students are encouraged to read the topic prior to the lecture.

2. The course assignment is a written report on Analysis of Capital Structure and Dividends
Policy for a publicly listed firm.
3. Lecture presentations will be uploaded on Learning Management System (LMS).
4. Unannounced quizzes will be taken to gauge student progress.

Course Learning Outcomes mapped to Program Learning Outcomes

Knowledge of
Communication Critical Glocal
All Business Ethics
Program Learning Skills Thinking Mindset
Disciplines
Goals

Course Learning
Outcomes

1 X X

2 X X

3 X X

4 X X

5 X X
 6 (LG302) X X

Mapping to
Reading Course Learning Session Topic
Outcomes

• Overview of Risk Return Trade-off

Chapter 8 • Standalone Risk
CL01
Risk and Rates of • Risk in a Portfolio Context
CL06
Return & Handout • The CAPM & Beta
• Introduction to Efficient Frontier

• Stock Price versus Intrinsic Value

Chapter 9
CL02 • Enterprise-Based Approach to Valuation
Stocks and Their
CL06 • Multiple & EVA based approaches to valuation
Valuation
• Equilibrium stock price

• Approaches computing to component costs (Debt,

Chapter 10 CL04 Preferred Stock, Retained Earnings, New Common
The Cost of Capital CL06 Equity)
• Introduction to WACC

• Capital Budgeting Projects

Chapter 11
CL03 • Projecting the Cash flows
The Basics of Capital
CL06 • Introduction to Capital Budgeting tools &
Budgeting
application: Payback, NPV, IRR & MIRR

• Issues in Cash Flow

Chapter 12
• Risk Analysis in Capital Budgeting
Cash Flow CL03
• Evaluating projects with unequal lives: least
Estimation and Risk CL06
common multiple of lives approach and Equivalent
Analysis
annual annuity approach;

Chapter 13
Real Options and
• Introduction to real options in context of capital
Other Topics in CL03
budgeting
Capital
Budgeting

• Capital Structure Decisions

• Business and Financial Risk
Chapter 14
• Estimating the Optimal Capital Structure under
Capital Structure and CL04
the MM Theory
Leverage
• Cost of Equity and Firm’s value with and without
leverage; Trade-off Theory, Signaling Theory

• Dividend Theories
Chapter 15
CL05 • Dividend payout policies
Distributions to
CL06 • factors affecting the dividend policy
Shareholders
• Stock Dividends, Stock Splits and Repurchases.
 Text Book and Pre-Course Reading Material, Important Dates.

Recommended Text:
Fundamentals of Financial Management: Theory and Practice. Eugene F. Brigham & J. F.
Houston, 15th edition (2019)

Dates as per IBA schuedule

• See Portal

Prerequisite Skills and Knowledge to take this Course

FIN 201

Assessments and Grading Scheme

Assessment Due Date Remarks

Assignment TBD Assignment will be done in groups of 03

The quizzes may be in advance or from the
Quizzes Ongoing previous topic. There will be a perfect zero if
you miss the quiz
Hourly Exam Paper Exam Weeks There are three exams of 20+20+30 weightage
This course follows absolute grading.

Marks Distribution (Tentative)

Marks Total Marks

Marks Head Total Frequency Total Exempted
/Frequency /Head

Assignments 1 0 10 10

Quizzes 6 1 2 10

Mid Exam Papers 3 0 30+40 70

Class Participation 10 0 TBD 10

Total Marks 100

Comments and/or Suggestions

• Since subsequent topics build on previously learned material, it is imperative that students
keep up with the material. In addition, you should ensure that lectures are understood
properly. No recourse for missed quiz(s), except n-1.
• A student who misses a class is responsible for obtaining any handouts and information on
course content, assignments, due dates, test dates, etc.
• Unethical behavior (cheating, plagiarism, proxy attendance) will be strictly penalized.

Technology & Innovation

 • All course materials will be posted on LMS and grades will be posted on ERP. Students are
responsible to stay updated on these platforms.
• Students should bring the calculator & textbook to class.
• Familiarity with MS Word & Excel.
• For discussions and course related queries, please join the course fb group.

Experiential Learning Exposure(s)

NIL

Social Contribution / Impact

NIL

Academic Conduct

IBA policy

Attendance Policy

IBA policy

Plagiarism Policy

IBA policy

Withdrawal Policy

IBA policy