Corporate Finance

FIE402E Corporate Finance

  • Topics

    Topics

     

    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.

  • Learning outcome

    Learning outcome

    The goal of this course is to teach students the principles and tools of corporate financial management. Upon successful completion of the course, students should be able to:

    • 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

    Students should acquire the skills to:

    • 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

     

    Students should develop the competence to:

    • Use the ideas and techniques of financial economics to deal with applied real-world problems.

  • Teaching

    Teaching

    Lectures in in English. All power points are in English.

    Students should be prepared to discuss case assignments in class

  • Requirements for course approval

    Requirements for course approval

    None

  • Assessment

    Assessment

    4 hours written school exam

  • Computer tools

    Computer tools

    Knowledge of Excel.

    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.

  • Semester

    Semester

    Autumn and spring

  • Literature

    Literature

    Berk and DeMarzo, Corporate Finance, Pearson Global Edition, 4th edition.

Overview

ECTS Credits
7.5
Teaching language
 English both semesters
Semester
Spring, Autumn

Course responsible

Konrad Raff (autum) and Michael Kisser (spring)