University of Queensland - FINM1415: Introduction to Finance (Solutions)

This course provides an introduction to finance. It describes the role and function of stock markets, bond markets and foreign exchange markets. It develops an understanding of the time value of money and how organisations finance their operations, make investments and distribute profits.

This course covers a number of important concepts and provides an introduction to such topics as financial mathematics, debt and equity valuation, project evaluation with emphasis on the discounted cash flow techniques of net present value (NPV) and internal rate of return (IRR), the weighted-average cost of capital (WACC), risk, diversification and the capital asset pricing model (CAPM).

This course provides the necessary groundwork for the other finance courses offered by UQ Business School. Students should note well that theory and practical work cannot be separated. Students must understand the basics of each topic's theory in order to tackle practical problems. The course is progressive. For example, the introductory topic on the time value of money forms the necessary basis for stock and bond valuation models. Thus, the key to succeed in this course is to study consistently.

✔ After successfully completing this course you should be able to:

• Explain the objective of the firm, and apply appropriate approaches to making optimal financial decisions at individual security and portfolio levels.
• Apply the time value of money concept to various valuation problems including valuing financial assets (Shares, Bonds, Mortgages) and to make project investment decisions consistent with the firm's objective.
• Apply capital budgeting techniques and be able to critically evaluate the resulting analysis in achieving the firm's key objective.
• Understand the underlying operation of capital markets, and evaluate the risk and return in a financial context.
• Working collaboratively as a group in collecting and analyzing financial data.