Course Overview:

This course offers a comprehensive introduction to corporate financial management, focusing on the creation of value through effective decision-making in a global context while aligning with the United Nations Sustainable Development Goals (SDGs) and the Principles for Responsible Management Education (PRME). Students will explore key financial theories and practices, emphasizing three main areas: capital budgeting, asset pricing, and financial investments.

Capital budgeting is a critical aspect of financial management, where firms determine which projects will create value. The course highlights the net present value (NPV) method as the most widely used and optimal decision-making tool, alongside other selection criteria that connect to NPV. Students will evaluate how capital budgeting decisions can support sustainable business practices and contribute to the SDGs, particularly those related to industry innovation and economic growth.

In the realm of asset pricing, students will analyze how financial assets—specifically stocks and bonds—are priced in the market. Discussions will center on the factors influencing stock prices, including expected dividend streams and the market risk associated with a firm’s projects. Additionally, the course will cover how the term structure of interest rates and promised coupon payments impact bond pricing, as well as strategic considerations like the effects of pay-out ratios and value creation in the context of mergers and acquisitions. This section will also explore the ethical implications of asset pricing and the importance of transparency and accountability in financial markets, in line with PRME values.

The course will also address the financial investment decision from a portfolio perspective, culminating in an exploration of the Capital Asset Pricing Model (CAPM). Students will learn how CAPM is utilized to establish discount rates for capital budgeting and assess risk and return in various investment scenarios. Emphasis will be placed on responsible investment strategies that align with sustainable development goals and promote social and environmental responsibility.

By integrating these concepts, the course prepares students to analyze financial policies and practices while considering the complexities of the global environment. Topics such as financial planning, working capital management, and capital markets will be covered, equipping students with the skills needed for effective financial analysis and valuation in today’s dynamic financial landscape. The course aims to foster critical thinking and ethical decision-making, ensuring students are well-prepared to contribute positively to their organizations and society.

Course Learning Outcomes:

By the end of this course, students will:

• Analyze and utilize financial statements in the context of valuation and capital budgeting, considering their implications for sustainable decision-making and stakeholder impact.

• Apply and critically evaluate capital budgeting techniques, emphasizing their role in fostering ethical and socially responsible investments.

• Assess the value of financial assets such as stocks and bonds, incorporating considerations of long-term financial stability and societal benefit.

• Explain Portfolio Theory and design portfolios of financial assets that balance risk, return, and alignment with United Nations Sustainable Development Goals (SDGs).

• Explain the Capital Asset Pricing Model (CAPM) and apply it to determine the cost of capital, with attention to ethical investment strategies and corporate responsibility.

• Understand the Efficient Markets Hypothesis, analyze its implications for financial decision-making, and reflect on its limitations in addressing broader societal and environmental challenges.