GRA 6514 Corporate Finance
GRA 6514 Corporate Finance
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.
Students at the end of the course should be able to
- Identify the sources of the costs and benefits of equity and debt financing.
- The impact of different financing decision on the firm's cash flow.
Students at the end of the course should be able to
- Quantify the impact of the cost and benefits of financing on the value of the firm and its performance.
- Understand under what circumstances equity financing is more desirable than debt financig or vice versa.
The course will provide students with the principles and the skills to make informed decisions on capital structure and capital budgeting issues.
- 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
Lectures: in the lectures we will cover theories aimed at identifying cost and benefits of different financing choices and understand their impacts on the firm value and performance. The teaching will cover theories, their proofs, and the solution of simple valuation/capital structure cases and problems.
Homework: The homework will require the application of the notions and solution techniques covered in class to solve more complex capital structure and valuation problems.
The exam for this course has been changed starting academic year 2023/2024. The course now has two exam codes instead of one. It is not possible to retake the old version of the exam. Please note new exam codes in the Exam section of the course description.
It is the student’s own responsibility to obtain any information provided in class.
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. 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.
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.
Disclaimer
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
| Assessments |
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Exam category: Submission Form of assessment: Written submission Invigilation Weight: 30 Grouping: Individual Support materials:
Duration: 2 Hour(s) Comment: Mid-term written examination under supervision Exam code: GRA 65142 Grading scale: ECTS Resit: Examination when next scheduled course |
Exam category: Submission Form of assessment: Written submission Invigilation Weight: 70 Grouping: Individual Support materials:
Duration: 3 Hour(s) Comment: Final written examination under supervision Exam code: GRA 65143 Grading scale: ECTS Resit: Examination when next scheduled course |
All exams must be passed to get a grade in this 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.