FIN 3521 Corporate Finance
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 in corporate finance is to provide the students with essential 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 focuses mainly on capital structure and dividend decisions, followed by an introduction to option theory, risk management and mergers and acquisitions.
After completing the course, students are requiered to master tasks such as:
- Understand the concept of capital structure, the relationship between debt and equity
- Understanding the relationship between leverage and risk
- Understand the meaning of perfect capital markets
- Understand the meaning of taxes on the valuation of assets
- understand the importance of dividend
- Understanding option pricing
- Understand the basis for risk management
- Understand the basis of mergers and acquisitions
Students having completed the course are requiered to satisfactory conduct analytical exercises such as:
- Calculate the debt-to-equity ratios impact on cost of equity
- Calculate the value of the company with and without debt
- Explain the impact of taxes on valuation of the assets
- Explain the importance of the dividend
- Explain the principlesof options
- Explain the importance of risk management
The course is based on Modigliani and Millers 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.
- Capital Structure: Basic concepts
- Capital Structure: Limits to the use of debt
- Valuation and capital budgeting for the levered firm
- Dividends and other payouts
- Equity financing
- Debt financing
- Options and corporate finance
- Warrants and convertibles
- Mergers and acquisitions
The course builds around 45 lecture hours, mandatory work assignments, individual reading of assigned chapters from the text, and independent work on the end-of-chapter problems. Conduct of class and teaching style assumes students have prepared by reading the material lectured on, and (ii) have satisfied the required prerequisites.
Coursework requirements (Mandatory)
During the course, three work assignments are given. The assignments are distributed electronically on It's learning. Aswers to the assignments problems are to be submitted electronically. Two out of the three assignments must be passed in order to sit for the final exam given at the end of the lectures series. Administrative details regarding the mandatory work assignments will be provided in class.
Feedback on the assignment problems is provided in two ways:
- It's learning sums up and automatically returns to students their overall score upon submission of the answers.
- A review of the assignment problems is given during the first class-meet following each assignment.
It is recommended to use spreadsheets for solving the three mandatory assignments.
Students that have not gotten approved the coursework requirements, must re-take the exercises during the next scheduled course.
Students that have not passed the written examination or who wish to improve their grade may re-take the examination in connection with the next scheduled examination.
Higher Education Entrance Qualification.
BØK 3423 Finance or equivalent.
|Mandatory coursework||Courseworks given||Courseworks required||Comment coursework|
|Mandatory||3||2||In order to sit for the final exam, students must obtain approval of minimum two of three assignments during the course. See Learning process and workload.|
|Comment coursework:||In order to sit for the final exam, students must obtain approval of minimum two of three assignments during the course. See Learning process and workload.|
|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
Prepare for teaching
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.