BØK 3632 Financial Strategy
The essence of business administration includes corporate finance (i.e. investment and financing). Good knowledge within these areas is a necessary prerequisite to understand the economic content of investment and financing decisions, obtain decision-relevant information, discuss and assess alternatives, make correct decisions and convey relevant and useful information.
The aim of this course within the field of corporate finance is to provide the students with essential basic knowledge and skills, so that they can take part in discussions on problems in finance and carry out simple analyses within the field, make correct decisions and communicate the results of the analyses in a comprehensible manner.
The course Financial Strategy is mainly focused on financing issues and management of financial risks. By studying the main activities carried out in a company as financing projects over multiple periods, emphasis is placed on evaluating all economic and sustainable effects of the project and of taking a long-term perspective. The course therefore starts with capital structure and dividend decisions, followed by an introduction to option pricing.
After completing the course, students are required to master tasks such as
- Understand the concepts of debt and equity, such as bonds and equity issues:
- Understand the concept of capital structure and the relationship between leverage and risk
- Understand the meaning of perfect capital markets
- Understand the basic elements in a valuation process
- Understand the impact of taxes on valuation of assets
- Understand the importance of dividend
- Understand option pricing
Students having completed the course are required to conduct analytical exercises such as:
- Calculate the value of a bond and a share issue
- Calculate impact on of debt-to equity ratios on risk in equity and the value of the company with or without debt v
- Explain the importance of taxes for valuation of the assets in an international context.
- Explain the impact of sustainable investment decisions.
- Explain the importance of the dividend.
- Explain theories contrary to the perfect capital markets
- Explain the principles in the options pricing
The course is based on Modigliani and Miller's propositions for capital markets, and then explains challenges in real world. The student should be able to relate to the importance of these different theories for the business, the owners, the employees and the community. The student should be able to ask critical questions to all the aspects that have a bearing on a company's value. Moreover, the students, after this course, should be able to reflect on how a business should be run in order for it to be a positive contribution to society in general.
- Short summary of BØK 3423 Finans
- Risk. BMN kap. 1-2
- Risk and cost of capital. BMN kap. 3
- Financing - Long term financing. BMN kap. 4-5
- Capital structure and risk. BMN kap. 6
- Capital structure and value - Modigliani & Miller (no taxes). BMN kap. 7
- Capital structure and value - Modigliani & Miller (taxes). BMN kap. 8
- Adjusted present value. BMN kap. 9
- Valuation. BMN kap. 10
- Dividend. BMN kap. 11
- Options. BMN kap. 12
The course is conducted by two lectures, one at the start of the course and a closing lecture. Each of these lectures are three hours.
The course is conducted at 2 regular lectures, one at the start of the course and one final lecture. Each of these lectures is for three hours.
There are 12 weeks between the first and the last regular lecture. During these 12 weeks, the student has access to approx. 15-20 videos undergoing syllabus in the subject. The purpose of these videos is knowledge transfer. Each week there is a three-hour lecture focusing on understanding and applying theory. In weeks 38, 42 and 45 there are tests. The class is then divided into smaller groups, each group assigned a classroom. Students are awarded a test to be solved in three hours. There are student counselors present in each classroom who help students with the tests.
The student is responsible for obtaining all relevant course information provided by the lecturer in the first lecture, and which are not published on the course homepage / It's learning or syllabus. Use of spreadsheet is recommended in the course.
In course delivery as online courses, lecturer will, in collaboration with the student administration, organize an appropriate course implementation, combining different learning activities and digital elements on the learning platform. The online students are also offered a study guide that will contribute to progression and overview. Total recommended time spent for completing the course also applies here.
Higher Education Entrance Qualification
Due to the Covid-19 pandemic, there may be deviations in teaching and learning activities as well as exams, compared with what is described in this course description.
Information about what is taught on campus and other digital forms will be presented with the lecture plan before the start of the course each semester.
The course Basic Financial Management from the Bachelor of Business Administration Program, Introdution to Finance or equivalent.
|Exam category||Weight||Invigilation||Duration||Support materials||Grouping||Comment exam|
Form of assessment:
Internal and external examiner
Examination every semester
|Form of assessment:||Written submission|
|Support materials:|| |
|Resit:||Examination every semester|
Feedback activities and counselling
Student's own work with learning resources
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 7,5 ECTS credit corresponds to a workload of at least 200 hours.