Management Development Institute Gurgaon

Course Outline

Post Graduate Diploma In Management- International Business-MIM

(Twinning Program) (2023-25)
Title of the Course : Fundamentals of Finance Course Credit :3
Core/Elective : Core Term :I
Area : Accounting and Finance Academic Year : 2023-24
Course Faculty : Anshul Jain Contact No. :5302

Email : anshul@mdi.ac.in

I. Introduction
This course is designed to provide the students with the fundamental theoretical knowledge and
tool of finance. It deals with issues such as: Why should companies create value? How to measure
the financial performance? What is the purpose of financial markets? How does time impact the
value of money? How are financial assets priced? How investment projects are selected?

This course is foundational in nature with the objective of providing a base for other advance
courses in the area of finance. The course is also essential for having a good grounding in finance
and would help to enable the participants to make optimal utilization of firms’ financial resources.

II. Course Objectives

At the end of the course you should be able:
• To understand the main financial statements and how they can be used for the financial analysis
of a company
• To understand the impact of time on value of money and integrate it into the financial decision
making process
• To understand the use of net present value as a measure of value creation of an investment
opportunity
• Understand the fundamental concept of opportunity cost of capital of an investment decision
• To use the market interest rates to determine the appropriate discount rate for a set of cash flows
• To understand the valuation of bonds and stocks
• To understand the tradeoff between risk and return for large portfolios versus individual stocks
 III. Assurance of Learning
Among others, this course seeks to impart the following learning goal(s) and associated learning
outcomes. Students’ performance on these learning goals and demonstration of the associated
outcomes will be specifically assessed through the mid-term/end-term examinations.

PGDM-IB/LG3: Critical and innovative thinking

Critical and innovative thinking to identify problems and opportunities, evaluate alternatives
and come up with reasoned solutions

Unsatisfactory (0- Satisfactory (4 - Exceeds

LO1. Demonstrate the
ability to identify
problems afflicting an
organization and critically
analyze them using
techniques, models, or
frameworks
under 4)
Can probably identify the
main problem but not the
subsidiary issues and
relationship with the main
issue; recognizes context,
identifies inconsistencies
and somewhat questions
information provided;
applies appropriate tools
to analyze the information
with fair amount of
accuracy
under 8) Expectations (8 - 10)
Clearly identifies the Clearly identifies the
main problem and main problem as well as
includes some of the the subsidiary issues, both
subsidiary issues and explicit and hidden, and
relationship with the main their relationship with the
issue; recognizes context, main issue; recognizes
identifies inconsistencies context and insightfully
and somewhat questions questions the information
information provided; provided and addresses
applies appropriate tools inconsistencies; applies
to analyze the information appropriate tools to
with fair amount of analyze complex
accuracy information with high
level of accuracy

LO2. Demonstrate Is unable to formulate any Formulates conclusions, Examines conclusions,

integrative and reflective
thinking in evaluating
potential alternatives and
proposing effective
solutions
reasonable conclusions in
the light of information
and choices available or is
unable to provide any
reasonable argument for
choices made.
recognizes conflicts and discriminates among
trade-offs, provides choices and trade-offs
arguments for choices with sharpness, discusses
made in a linear manner issues thoroughly with
and with average cogent arguments,
conviction presents an integrated
viewpoint with conviction

LO3. Demonstrate Is unable to think in an Incorporates at least one Exhibits a keenness to

innovative thinking in
problem solving and
decision-making
original fashion about
issues, situations and
opportunities; displays a
reluctance or hesitation to
think differently from the
tried and tested choices.
new direction in explore an uncharted path
approaching the problem to resolving a problem
at hand; exhibits an open that could be potentially
mind with divergent and risky even; recognizes the
contradictory perspectives challenges and
and attempts to explore consequences of all
them; connects ideas in approaches; develops a
novel ways though the consistent plan of action
end solution may not be and articulates the choice
entirely novel convincingly; transforms
ideas into novel solutions.
 IV. Pedagogy
The pedagogy for this course would consist of lectures, case studies, presentations by students,
exercises, group assignments and group discussions.

V. Evaluation Criteria
Component Weight
End-Term 30%
Mid-term 30%
Class Participation and Case Discussion 10%
Quizzes 15%
Project/Assignment 15%
TOTAL 100%

VI. Text Book

RWJK: Ross, Stephen A. Westerfield, Randolph W. Jaffe, Jeffrey Jordan “Corporate
Finance”, (McGraw-Hill, 13th e- edition via Connect Platform).

VII. Session Plan

Session Session Theme Reading/Cases
No.
1-2 Introduction to Finance, Financial Markets and Institutions, arbitrage RWJK-1
and law of one price.

3-4 Financial Statement Analysis- understanding the main financial RWJK-2&3

statements, their limitations; financial analysis of a company Exercises and Case

5-7 Fundamentals of Valuation, Risk and Return: Time Value of Money RWJK-4
and interest rates; Future value and Present Value, Compounding, Exercises and Case
Annuities and Perpetuities; Risk and return

8-10 Investment Decision rules and Projects valuation: Techniques for the RWJK-5,6,7
appraisal of Long term investment decisions -NPV, IRR, Payback etc.; Exercises and Case
Estimating Project Cash Flow; Opportunity cost of Capital; Hurdle
Rates; Required Return. Factoring of Inflation and Risk in Capital
Budgeting decisions
11-12 Valuation of Bonds: using present value formula to value bonds; bond RWJK-8
prices and interest rates; real and nominal rates of interest Exercises and Case

13-14 Valuation of Stocks RWJK-9

Exercises and Case
15-16 Introduction to Risk and diversification RWJK-10, 11
Exercises and Case
17-18 Capital Structure, Financing and Dividends RWJK – 15, 16, 19
Exercises and Case
19-20 Summing up and Project Presentations
 VIII. Suggested Readings
AD: Damodaran, Aswath “Corporate Finance: Theory and Practice”, (John Wiley & Sons, Inc.,
2nd or later edition)
BMAM: Brealey, Richard, Myers, Stewart, Allen, Franklin and Pitabas Mohanty “Principles of
Corporate Finance”, (McGraw-Hill, 11th edition).
EB: Ehrhardt, Michael C. and Eugene F. Brigham & “Corporate Finance- A Focused
Approach”, (Cengage Learning, 5th Edition)

IX. Other Details

The students will be assigned readings from the text book and they will be expected to come
to class prepared and ready to take part in class discussions. Regular attendance helps in
improved performance. Students are hence, advised to not miss classes unless absolutely
essential. In case of such absence, it is up to the student to find out what has been covered in
class and get up to speed. Necessary to carry a calculator and the book to all the sessions. Keep
a personal record of scores on all quizzes, and assignments. The course outline and assignment
schedule are subject to change. The students opting for this course should have sound
knowledge in basic statistics and mathematics. More so they should be interested in dealing
with numbers and equations. No copying in assignments. No request for postponement of
deadlines. No alternative evaluations.