Post Graduate Diploma in Management Academic Year 2011-12 Term: II

Course Title: Credits: Course Instructors: B Hariprasad LV Ramana Yogesh Maheshwari

FINANCE - I 4 Area: Finance & Accounting

hariprasad@iimidr.ac.in ramana@iimidr.ac.in maheshwari@iimidr.ac.in

Objectives: This foundation course in finance introduces the participants to the basics of financial management and its environment. Successful management of businesses requires a sound understanding of some of the decision-making tools, which would be introduced as a part of this course. The course aims at providing the participants with the following: an understanding of financial planning and analysis, knowledge of working capital decisions, basics of risk, return and valuation, and underpinnings of financial instruments and markets.

Pedagogy: The pedagogy would consist of an appropriate mix of lectures, cases and discussions. Text: Brigham Eugene F. and Ehrhardt Michael C., Financial Management: Text and Cases, India Edition, Cengage Learning, New Delhi, 2005. (BE)

Evaluation: Component Class Participation Quizzes Mid term Examination End term Examination Total %age 10 20 35 35 100

Session-wise plan: Session No. 1. Topic/s Goals and Functions of Finance Financial Statements: From Accounting to Finance Financial Statements Analysis Financial Planning and Forecasting Working Capital Decisions -1 Working Capital Decisions -2 Working Capital Decisions -3 Time Value of Money Bond Valuation Stock Valuation Reading BE: Ch. 1 Case/ Article Article: Ten Ways to Create Shareholder Value (HBR) Article: Coming up Short on Nonfinancial Performance Measurement (HBR) Case: Sears, Roebuck and Co. vs. Wal-Mart Stores, Inc. (HBS) Case: Tire City, Inc. (HBS) Article: Meeting the Liquidity Challenge (AT) Case: Multitech Limited Case: Dells Working Capital (HBS)

2.

BE: Ch. 3

3.

BE: Ch. 13

4. 5. 6. 7.

BE: Ch. 14 BE: Ch. 22 BE: Ch. 22 BE: Ch. 22

8. 9. 10.

BE: Ch. 2 BE: Ch. 6 BE: Ch. 7

Case: Local Bank (BE) Case: Boeing Company (BE) Case: Temp Force Company (BE)

11.

Basics of Risk and Return

BE: Ch. 4

Article: Is the Equity Risk Premium still Thriving, or a Thing of the Past? (JFP) Article: Is Modern Portfolio Theory Dead? (TI) RM: The Financial System Case: Japanese Financial System: From Post-war to the New Millennium (HBS)

12. 13.

Introducing Asset Pricing Models Financial System

BE: Ch. 5 BE: Ch. 1

14.

Capital Market

BE: Ch. 1

RM: Money and Capital Markets: Another Option for Funding Growth (HBS) Case: Netscapes Initial Public Offering (HBS)

15.

Money Market

BE: Ch. 1

RM: Money and Capital Markets: Another Option for Funding Growth (HBS) Article: A Proposal for Quoting Money Market Rates (FAJ)

16.

Term Structure of Interest Rates Derivatives & their Market -1 Derivatives & their Market -2

BE: Ch. 1

Article: What Practitioners Need to Know About the Term Structure of Interest Rates (FAJ) Article: Demystifying Derivatives (HBR) Article: Derivative Ruination in the 1990s: Les Apparences sont Trompeuses (TIBR) Article: Market Efficiency versus Behavioral Finance (JACF) -

17.

BE: Ch. 23

18.

BE: Ch. 23

19. 20.

Market Efficiency Reviewing the Learning

BE: Ch. 7 -