FIE402 Corporate Finance
The course is built around the following three main topics:
(i) Financial strategy: capital structure, dividend policy, issuing of securities
(ii) Valuation and value creation: Discounted cash flow techniques, Interaction of financing and investment decisions.
(iii) Options in corporate finance: real options, equity and debt as options, convertible debt
The first part of the course covers various theories that trade off the costs and benefits for a firm of choosing between debt and equity financing. We will come up with a framework of an optimal capital structure and payout policy. In addition, students will gain an understanding of and institutional knowledge in the area of equity and debt issues. The second part of the course will look at the interaction between capital structure and valuation. We will cover valuation techniques that incorporate financial side-effects, such as Adjusted Present Value (APV), Weighted Average Cost of Capital (WACC), and the Flow-to-Equity. The third part of the course focuses on the role of options for corporate finance. We will consider the consequences of viewing debt and equity as options. In addition we will consider the valuation of investment projects with embedded real options. Finally, we will cover various specialized topics, including risk management and mergers and acquisitions.
The goal of this course is to teach students the principles and tools of corporate financial management. Upon successful completion of the course, students shall have:
- critically evaluate different capital structure theories
- compare and apply various discounted cash flow techniques
- critically reflect the implications of option valuation for firms financing and investment decisions
- critically evaluate merger & acquisition opportunities
- apply capital structure theories to come up with optimal financing strategies for firms
- value assets using complex discounted cash flow methods
- analyze investment decisions using a `real options` approach
- analyze different payment methods for mergers & acquisitions
- assess the costs and benefits of different risk management strategies
- Use the ideas and techniques of financial economics to deal with applied real-world problems.
Lectures in English. All powerpoints are in English.
All lectures will be livestreamed and recorded.
Students should be prepared to discuss case assignments in class. Students following the classes at home will be able to participate through Mentimeter .
There are no formal prerequisites for the course but students are expected to be familiar with
basic finance concepts (e.g. time value of money; capital asset pricing model; project valuation)
typically covered in most bachelor-level finance courses.
Requirements for course approval
To earn course approval, students are required to earn a 'pass' on a written, individual homework assignment. The homework assignment is handed out in the middle of the term and graded on a pass/fail basis.
4 hours written school exam in English. The exam questions have to be answered in English. The exam in autumn will be conducted through Wiseflow.
*While the primary form of assessment in this course includes a school exam, digital assessment is available for students who are unable to get into Norway due to official travel restrictions under the Covid-19 pandemic.
If this relates to your situation, and you are restricted from attending physical assessment in the course, please send a short application to be enrolled in digital assessment to email@example.com by September 15th at the latest.
UPDATED 12 October 2020:
In the autumn of 2020, the school exam will be converted to a: 4-hour individual home exam at the same time as the originally planned exam.
Grading Scale: A-F
Grading scale: A-F
Access to the online-tool MyFinanceLab, which accompanies the texbook. For students who do not wish to buy the course book (Berk and DeMarzo), a separate license to MyFinanceLab can be purchased directly online.
Berk J. and DeMarzo P., "Corporate Finance" (2014), Pearson Global Edition, 4th edition.
- ECTS Credits
- Teaching language
- English both semesters
Autumn and Spring. Offered autumn 2020.
UPDATED 12 October 2020: The assessment form was revised due to the ongoing corona pandemic. See assessment section for details.
Autumn: Assistant Professor José Albuquerque de Sousa, Department of Finance, NHH
Spring: Associate Professor Konrad Raff, Department of Finance, NHH