• Agency Theory

KABARAK UNIVERSITY • Corporate Governance

Assignment One
Forms of Business Organizations
SCHOOL OF EDUCATION • Sole proprietorship
Wk 4
P.O Private Bag – 20157, KABARAK, KENYA • Partnership
• Company-Private and Public
Course Code : FNCE 110 Introduction to Financial Markets and Systems
Course Title : Principles of Finance • Roles and importance of financial
Credit Hour : 3.0 markets and systems
Lecturer : Dr. Stella Korir • Markets participants & financial
Email : skorir@kabarak.ac.ke innovation
COURSE OUTLINE: FNCE 110 – PRINCIPLES OF FINANCE • Types of financial markets
Purpose of the course: • Characteristics of a good market
To enable the students to understand the relevance and application of • Functions of financial markets
finance techniques in analyzing and solving finance related issues. • The flow of funds and the financial
Expected Learning outcomes: system
1. Explain the concepts and principles of finance and the conceptual • Role of government in the financial
tools of analysis. system; capital markets authority, central
2. Evaluate the different forms of business organization structures bank, central depository and settlement
3. Analyze goals of the firm and role of the financial manager in company
financial decision making. Time Value of Money
4. Evaluate the various short-term and long-term sources of finance • Present value (lump sum and annuity)
for firms, • Future value (lump sum and annuity)
5. Analyze the risk-return trade-off for investments • Annuity due versus ordinary annuity
Wk 5-6
DATE DETAILED COURSE CONTENT WEEKS • Importance of time value of money
Introduction to Business Finance • Techniques of time value of money
• Introduction to finance • Loan amortization
• Interest rate calculations
• Definition of Business Finance Wk 1&2
• Related disciplines CAT 1
• Scope and of Finance Functions Risk and Return Relationships
Business goals and Agency Theory • Meaning and nature of risk
• Objectives of a Business Entity Wk 3 • Measurement of risk and return Wk 7-8
• Internal and External source of finances • Interrelationship between risk and
return

FNCE 110: PRINCIPLES OF FINANCE Page 1

 Sources of cost of capital Brigham E.F. and M.C. Ehrhardt (2009), Financial Management: Theory
• Importance of the sources of capital and Practice, 11th Ed.; International student edition, Thomson
Wk 8&9
• Types of sources of capital South-Western.
• Components of the WACC Brealey R.A and Myers S.C., and Marcus, (2007) Fundamental of corporate
Capital Investment decisions under certainty Finance, 4th ed; McGraw Hill
• Importance of capital budgeting decisions Attendance:
Wk10/11
• Types of projects • It has been observed that your attendance in class has a direct
• Methods of analyzing /evaluating projects correlation with your final grade. Do make an attempt to attend all
classes.
Dividend policies • Attendance of lectures is mandatory and roll call will be taken.
• Factors influencing the dividend decision • Minimum class attendance threshold is 80%
of a firm
• Forms of dividend payment Exams: Students must do all assignments and CATS. NO make-up CATS
• The dividend policies; pay-out ratio without proper reasons.
Wk 12
policy, residual policy, stable predictable
policy, low regular plus extra policy CATS or assignments
• Dividend payment chronology- Coursework 30%
declaration date, holder of record date, End of semester examination 70%
ex-dividend date and payment date Total 100%
Emerging issues and trends
Wk12
• Varies
CAT 2/Revision Wk 13
Exams Wk14/15

Core Reading Texts

I.M. Pandey (2010); Financial Management, 10th Edition Vikas Publishing
House PVT Ltd
Eugene F. Brigham, Joel F. Houston (2011); Fundamentals of Financial
Management, South Western (Cengage Learning)
Van Horne, J.C., (2009); Financial Management policy, 12th ed., Prentice
Hall

Other reading

FNCE 110: PRINCIPLES OF FINANCE Page 2