VO Grundlagen Finance at the University of Graz

The VO Grundlagen Finance (Fundamentals of Finance) course at the University of Graz is a foundational lecture designed to introduce students to the core principles and concepts of financial decision-making. Typically offered within the bachelor’s programs in Business Administration (Betriebswirtschaftslehre) and Economics (Volkswirtschaftslehre), it serves as a critical building block for more advanced finance courses.

The primary objective of the Grundlagen Finance course is to equip students with a solid understanding of the time value of money, risk and return, capital budgeting, and basic financial statement analysis. It aims to develop their ability to analyze investment opportunities and make informed financial decisions from both a corporate and an individual perspective.

Key Topics Covered

The course generally covers the following key areas:

• Time Value of Money: This fundamental concept is central to finance. Students learn how to calculate present and future values, annuities, and perpetuities. They understand how interest rates affect the value of money over time, a crucial element for evaluating investment opportunities.
• Risk and Return: The course explores the relationship between risk and return, introducing concepts like expected return, variance, standard deviation, and diversification. Students learn how to measure and manage risk in investment portfolios.
• Capital Budgeting: This section focuses on how companies make investment decisions, such as whether to invest in a new project or acquire another company. Students learn about various capital budgeting techniques, including Net Present Value (NPV), Internal Rate of Return (IRR), and Payback Period.
• Financial Statement Analysis: Students are introduced to the main financial statements – the balance sheet, income statement, and cash flow statement. They learn how to analyze these statements to assess a company’s financial health and performance, calculating key financial ratios to identify strengths and weaknesses.
• Valuation of Securities: The course provides an introduction to the valuation of stocks and bonds. Students learn basic valuation models and how to apply them to estimate the intrinsic value of these assets.

Learning Objectives and Assessment

Upon completion of the course, students are expected to be able to:

• Apply the time value of money concepts to solve financial problems.
• Calculate and interpret measures of risk and return.
• Evaluate investment projects using capital budgeting techniques.
• Analyze financial statements to assess a company’s financial performance.
• Understand the basic principles of stock and bond valuation.

Assessment typically consists of a final written exam that tests students’ understanding of the course material. In some cases, there may also be smaller assignments or quizzes throughout the semester that contribute to the final grade.

Importance and Prerequisites

Grundlagen Finance is a crucial foundation for students pursuing further studies in finance, accounting, or related fields. It provides the necessary knowledge and skills for more advanced courses such as Corporate Finance, Investment Management, and Financial Derivatives. While specific prerequisites may vary, a basic understanding of mathematics and statistics is generally recommended. A prior introductory course in accounting can also be helpful, but is not always strictly required.

By mastering the fundamentals of finance, students are well-prepared for careers in various financial roles, including financial analyst, investment banker, portfolio manager, and corporate treasurer.