FINANCIAL MANAGEMENT (in English)

Course Code 8242 Marks: 100 Credits: 4 Class Hours: 60
Course Title: FINANCIAL MANAGEMENT (in English)
1. Goals and Functions of Finance: Meaning of Financial Management; Financial Goal: Maximize
Shareholder Wealth; Maximization of EPS; Corporate decisions, Importance of Financial
Management, Factors influencing financial decisions. Agency Problems, Dealing with Agency
Problems; Principle of Financial Management; Social Responsibility; Corporate governance.
2. Capital Budgeting and Risk Analysis: Risk Evaluation Approaches-Certainty Equivalents (CE),
Risk-adjusted Discounted Rates (RADR), CE vs RADR., Probability Distribution Approach,
Decision Tree Approach, Behavioral Approach for Dealing with Risk-Sensitivity Analysis,
Simulation.
3. Theory of Capital Structure: Introduction to the Theory; Assumptions and Definitions; NI
Approach, NOI Approach and Traditional Approach; Modigliani-Miller (MM) Position; Arbitrage
process; Taxes and Capital Structure; Corporate plus Personal Taxes; Merton Miller’s Equilibrium;
Effects of Bankruptcy Costs, Tradeoff model, Pecking order theory.
4. Dividend Policy: Procedural Aspects of Paying Dividends; Types of Dividend Policies; Factors
Affecting Dividend Policy; Dividend Payout Irrelevance; Arguments for Dividend Payout
Mattering; Impact of Other Imperfections; Financial Signaling; Share Repurchase; Method of
Repurchase; Repurchasing as Part of a Dividend Decision; Stock Dividends; Stock Splits.
5. Capital Market Financing: Public Offering of Securities; Traditional Underwriting, Best Efforts
Offering, Making a Market, Shelf Registrations, Flotation Costs, Government Regulations for
Issuing Securities, SEC Review, SEC Regulations in the Secondary Market, Selling Common Stock
Through a Rights Issue, Value of Rights, Success of the Offering, Standby Underwriting,
Oversubscriptions, Rights Issue vs. Public Offering, Green Shoe Provision, Financing a Fledgling,
Initial Public Offerings, Information Effects of Announcing a Security Issue; Types of Long-term
Debt Instruments; Retirement of Bonds; Preferred Stock and its Features; Common Stock and its
Features; Bond Refunding.
6. Lease Financing: Definition of Lease, Types of Leases, Leasing Arrangements, Advantages and
Disadvantages of Lease, Lease versus Purchase Decision, Leasing in Bangladesh-Problems and
Prospects.
7. Working Capital Management: Importance, Determinants of Working capital, Policies for
Financing Current Assets, Operating Cycle and Cash Conversion Cycle, Estimating Working
Capital Requirement.
Books Recommended:
1. James C. Van Horne. Financial Management and Policy (Latest Edition). Upper Saddle River, New
Jersey: Prentice Hall.
2. James Van Horne and John M Wachowicz. Fundamentals of Financial Management (Latest
Edition). Upper Saddle River, New Jersey: Prentice Hall.