Knowledge - upon successful completion the student
•has a solid foundation for understanding theories connected to evaluation and choice of real investment under uncertainty. This includes utility theory, capital asset pricing model, state preference model and option pricing theory/models.
•understands the importance of relevant risk and how this is included in the calculation of project values and the associated project decision.
•understands how capital rationing and risk-reducing information may affect investment decision making.
•understands how capital structure may influence project values and create conflicts between debt and equity holders.
Skills - upon successful completion the student can
•make investment decisions when capital is limited.
•analyze projects in order to assess and evaluate uncertainty at both project and portfolio level.
•evaluate projects using models when total risk is relevant and when only part of the risk is relevant.
•take flexibility into account by identifying, analyzing and calculating value of real options, as well as adjusting decisions when uncertainty is gradually revealed.
•value financing effects for projects and explain how the financial situation of a company may create conflicts between various stakeholders as well as calculate the consequence of the related investment decisions.
General competence - upon successful completion the student
•is able to evaluate and deal with real investments in a number of different organizations in a sound manner.
•is able to ask critical questions and contribute in a constructive way to organizations working with real investments.