Principles of Financial Management
The main goals of this curricular unit are: introduce the main themes of financial management theory, conventions and market practices and preparation to more advanced C.U. It's targeted to students which backgrounds are not from management or finance. This C.U. is highly recommended for students attending Risk Management classes in the second semester. Therefore, the focus will be on topics from corporate finance, investments and introduction to fixed income and derivatives.
Luís Vasco Lourenço Pinheiro
Weekly - Available soon
Total - Available soon
Portuguese. If there are Erasmus students, classes will be taught in English
Good mathematical and probabilistic backgrounds, advance knowledge of excel spreadsheet, and curiosity on financial markets.
- Brealey, R., and S. Myers (2000). Principles of Corporate Finance. 6th Edition. New York: Irwin McGraw-Hill.
- Bodie, Z., A. Kane and A. Marcus (1999). Investments. 4th Edition. New York: Irwin McGraw-Hill.
- Hull, John (2000).Options, Futures and Other.
Theory and practice will be part of the course. Some practical examples are taught in class, but most of it will be provided through homeworks.
The final grade of the course will take into account all the homeworks and one exam. Students are encouraged to participate during classes and to read documentation listed in the bibliography of the course. The slides used in the classes are just a summary and should be seen as guideline for more depth learning of the subjects lectured in the course.
1. Corporate finance - Accounting statements
- Valuation models
- Impact of management decisions
2. Markets and conventions
- Market efficiency
- Exchanges versus over the counter (OTC)
3. Macro data
- Central banks
- Main macroeconomic indices
- Performance measures
- Portfolio theory
5. Introduction to fixed income instruments
- Duration and convexity
- Yield curve
- Hedging risk
6. Foreign exchange market
- Impact macro news on exchange rates
- Exchange rates and competitiveness
- Natural hedge
7. Introduction linear derivatives: futures and forwards
- Differences between futures and forwards
- Non arbitrage principle and cost of carry
- Payoff diagrams
8. Introduction non-linear Derivatives: Vanilla options
- Definition of calls and put
- Basic concepts of valuation
- Payoff and P/L diagrams
- Options strategies