GRA 6514 Corporate Finance

GRA 6514 Corporate Finance

Course code: 
GRA 6514
Department: 
Finance
Credits: 
6
Course coordinator: 
Salvatore Miglietta
Course name in Norwegian: 
Corporate Finance
Product category: 
Master
Portfolio: 
MSc in Finance
Semester: 
2018 Autumn
Active status: 
Active
Level of study: 
Master
Teaching language: 
English
Course type: 
One semester
Introduction

The main aim of the course is to provide an insight into more advanced topics in corporate finance, which are 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 more advanced topics in corporate finance such as agency problems and advanced valuation. 

Learning outcomes - Knowledge

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 agency problems. 

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 and moral hazard 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. 

Learning outcomes - Skills

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 forecast cash flow 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, moral hazard and information asymmetries.

Learning Outcome - Reflection

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. 

Course content
  • Financial statements and capital budgeting
    • Financial statement analysis (information, statements, Bloomberg)
    • Review of the time value of money and 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
    • Real options
Learning process and requirements to students

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.

Software tools
No specified computer-based tools are required.
Additional information

Honour Code

Academic honesty and trust are important to all of us as individuals, and represent values that are encouraged and promoted by the honour code system. This is a most significant university tradition. Students are responsible for familiarizing themselves with the ideals of the honour code system, to which the faculty are also deeply committed. The expected behaviour and honour code is outlined here.

Any violation of the honour code will be dealt with in accordance with BI’s procedures for cheating. These issues are a serious matter to everyone associated with the programs at BI and are at the heart of the honour code and academic integrity. If you have any questions about your responsibilities under the honour code, please ask.

Qualifications

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.

Exam categoryWeightInvigilationDurationSupport materialsGroupingComment exam
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA65141
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
15No 1 Semester(s)Group/Individual ( 1 - 4)Assignments, each one week long.
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA65141
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
10No 1 Semester(s)Individual Bloomberg assignment (self-taught online course)
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA65141
Grading scale:
Point scale
Grading rules:
Internal examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
25Yes2 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual Mid-term written examination under supervision
Exam category:
Submission
Form of assessment:
Written submission
Exam code:
GRA65141
Grading scale:
Point scale
Grading rules:
Internal and external examiner
Resit:
All components must, as a main rule, be retaken during next scheduled course
50Yes2 Hour(s)
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Individual Final written examination under supervision
Exams:
Exam category:Submission
Form of assessment:Written submission
Weight:15
Invigilation:No
Grouping (size):Group/Individual (1-4)
Support materials:
Duration: 1 Semester(s)
Comment:Assignments, each one week long.
Exam code: GRA65141
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:10
Invigilation:No
Grouping (size):Individual
Support materials:
Duration: 1 Semester(s)
Comment:Bloomberg assignment (self-taught online course)
Exam code: GRA65141
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:25
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:2 Hour(s)
Comment:Mid-term written examination under supervision
Exam code: GRA65141
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam category:Submission
Form of assessment:Written submission
Weight:50
Invigilation:Yes
Grouping (size):Individual
Support materials:
  • BI-approved exam calculator
  • Simple calculator
  • Bilingual dictionary
Duration:2 Hour(s)
Comment: Final written examination under supervision
Exam code: GRA65141
Grading scale:Point scale
Resit:All components must, as a main rule, be retaken during next scheduled course
Exam organisation: 
Continuous assessment
Grading scale: 
ECTS
Total weight: 
100
Sum workload: 
0

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.