GRA 6514 Corporate Finance
GRA 6514 Corporate Finance
The main aim of the course is to provide a detailed insight into more advanced topics in corporate finance with practical applications, which is necessary for both financial managers, financial analysts and consultants. It starts with a review of the basic concepts of financial management and valuation. It then focuses on optimal corporate policy, in regards to capital structure, investment and payout policy, in the presence of market imperfections. The final part of the course looks at advanced topics in valuation.
At the end of the course students should be able to understand and implement financial decisions concerning capital budgeting and capital structure.
Acquired Knowledge
The students are expected to become familiar with in-depth details of capital budgeting and capital structure, including the issues raised by taxes, information asymmetries and the nonlisted status of most companies in the economy.
Students should have a good grasp of investment decision rules, cash flow forecasting, the equity and debt cost of capital, capital structure decisions in the presence of taxes and costs of financial distress, adverse selection issues in raising debt and equity capital, payout policy and stock valuation.
Students should also understand the theoretical issues raised by the valuation of firms and projects with various financing structures, in preparation for further courses on applied valuation.
By the end of the course, students should be able to find relevant information about companies and be able to use it in the valuation of projects and companies. Students should also be able to communicate and support the assumptions made in the valuation process.
Students should be able to do cash flow forecasts, including sensitivity analysis, and understand more subtle issues related to forecasts, such as externalities, sunk costs and potential tax issues. They should also be able to calculate and use the project-based cost of capital, to properly incorporate interest tax shields in the value of firms and projects, and to consider issues raised by financial distress costs, debt overhang and information asymmetries.
The course aims to promote reflection on the fundamental principles of corporate finance and the shift from applying rules to an understanding of the ideas behind the rules used in practice.
- Financial statements and capital budgeting
- Financial statement analysis (information, statements, Bloomberg)
- The time value of money and the law of one price
- Investment decision rules
- Forecasting cash-flows
- Cost of capital (determinants of interest rates, debt cost of capital, using CAPM)
- Capital structure
- Perfect markets
- Debt and taxes
- Financial distress, managerial incentives and information
- Payout policy and stock valuation
- Valuation models (dividend-discount, total payout, free cash flow, comparable firms)
- Payout policy (dividends vs. share repurchases, dividend and capital gains taxes, dividend smoothing and signalling)
- Advanced valuation
- Capital budgeting and valuation with leverage
- The project cost of capital
- Financial modelling
- Real options
Lectures (class participation and problem solving are essential).
Please note that while attendance is not compulsory in all courses, it is the student’s own responsibility to obtain any information provided in class that is not included on the course homepage/itslearning or textbook.
This is a course with continuous assessment (several exam components) and one final exam code. Each exam component is graded by using points on a scale from 0-100. The components will be weighted together according to the information in the course description in order to calculate the final letter grade for the examination code (course). Students who fail to participate in one/some/all exam elements will get a lower grade or may fail the course. You will find detailed information about the point system and the cut off points with reference to the letter grades when the course start.
At resit, all exam components must, as a main rule, be retaken during next scheduled course.
All courses in the Masters programme will assume that students have fulfilled the admission requirements for the programme. In addition, courses in second, third and/or fourth semester can have specific prerequisites and will assume that students have followed normal study progression. For double degree and exchange students, please note that equivalent courses are accepted.
| Assessments |
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Exam category: Submission Form of assessment: Written submission Weight: 10 Grouping: Group/Individual (1 - 4) Duration: 3 Week(s) Comment: Assignment Exam code: GRA65141 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Weight: 10 Grouping: Individual Duration: 1 Semester(s) Comment: Bloomberg assignment (self-taught online course) Exam code: GRA65141 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 20 Grouping: Individual Support materials:
Duration: 2 Hour(s) Comment: Mid-term written examination with supervision Exam code: GRA65141 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 60 Grouping: Individual Support materials:
Duration: 3 Hour(s) Comment: Final written examination with supervision Exam code: GRA65141 Grading scale: Point scale leading to ECTS letter grade Resit: All components must, as a main rule, be retaken during next scheduled course |
A course of 1 ECTS credit corresponds to a workload of 26-30 hours. Therefore a course of 6 ECTS credits corresponds to a workload of at least 160 hours.