Course Outline: Foundations of Finance (MAF 404)

Instructor: Nahid Hossain, PhD

Cell: +8801855666640
E-mail: nahid453@gmail.com
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Course Description
This is an entry level course of finance which focuses on the essential aspects of financial decision-
making. The course starts with examining the different ways how companies can be structured and the
different types of ownership may exist. Afterwards, the principles and applications of financial
mathematics are introduced, including the time value of money and the law of one price. Finally, it
demonstrates the net present value and how firm managers should decide which potential projects are
to be pursued. Later on, the course deviates to an examination of firms from the perspective of
financial markets. It starts with considering the types of financing available to a firm and how equity
and debt capital are raised in practice. Portfolio theory is used to provide a foundation for determining
the relationship between expected risk and returns in financial investments. This course then allows to
examine how financial markets determine the overall cost of capital for a firm. Dividend payouts and
the choices between debt and equity financing are also covered. The course develops distinct
conceptual frameworks and specialized tools for solving real-world financial problems at both the
personal and corporate level.

Course Objective
The aim of this course is to provide the students a solid understanding and adoption of the basic
concepts, theories and principles of finance. This course is designed to cover an in-depth knowledge
that will make learners able to explain the concepts of time value of money, basic asset valuation, risk
and return paradigm, capital budgeting and financing decisions along with the dividend policy. Along
with these topics, this course will provide necessary exposure to analyse and evaluate decision-
making and portfolio management issues that directly increase the firm’s wealth through this course.

Learning Outcomes
On completion of this course, the students will be able to:

 Explain the financial goal of a firm.

 Apply time value of money principles to evaluate investment opportunities.
 Compute the value of stock and bond and understand the determinants of their yields.
 Apply various capital budgeting techniques to evaluate investment projects.
 Determine the required return of different sources of finance.
 Compute the weighted average cost of capital of a project or a firm.

Required Reading Materials

Text Book:
 Besley, S., Weston, J.F., and Brigham, E.F. Essentials of Managerial Finance. 14th ed. South-
western international edition.

Reference book:
 Gitman, L.J., and Zutter, C. J. Principles of Managerial Finance. 14th ed. Pearson global
edition.

Class Schedule
As per routine provided by the Institute.

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Course Coverage

Brief Contents Source

Introduction to Managerial Finance
The Time Value of Money
Risk and Return
The Cost of Capital
Capital Budgeting Techniques
Valuation of securities
Long-Term Financial Decision
Managing Short-Term Financial Decision
Text: Chapter 1; Reference: Chapter 1 & 2
Text: Chapter 4; Reference: Chapter 5
Text: Chapter 8; Reference: Chapter 8
Text: Chapter 11; Reference: Chapter 9
Text: Chapter 9; Reference: Chapter 10
Text: Chapter 6 & 7; Reference: Chapter 6 & 7
Text: Chapter 12 & 13; Reference: Chapter 13 & 14
Text: Chapter 15 & 16; Reference: Chapter 15 & 15

Evaluation Policy
The weights that will be assigned to the components of the course in total are as follows:
Full Course Components Marks Weightage
Attendance & Class Performance 05 5%
Mid Term-1 15 15%
Continuous Evaluation Mid Term-2 15 15%
Term Paper/ Case Report 15 15%
Presentation 10 10%
Final Examination 40 40%
Total Marks 100 100%

Grading Policy
The UGC prescribed grading policy will be followed. The grading will be done on a 4.00 scale with
the highest grade being A+ (A Plus) and the lowest grade being F.

Important Guidelines for Classes

 Students are expected to be present in their classes on time and should pay attention to the
topics to be covered in the class.
 Students are strongly advised and encouraged to participate in the classes.
 Students are advised to consult the instructor to resolve any type of difficultly in
understanding of the subject matters covered in the course.
 Students must be careful when handling assignments that are based on individual work. Zero
or ‘F’ Grade will be awarded in case any work is found to be copied and/or plagiarized. In
the event of group activities, the penalty for such offense will be carried out by each of the
group member equally irrespective of the extent of personal effort given to group work.
 We will have some assignments (term paper/ case study/ mathematical problem’s solution)
throughout the semester. The assignment must be submitted within the due dates. Failure to
submit any assignments on due time and date will be penalized. The extent of such penalty
will be based on the length of deviation from the original date and time.

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