APPLIES TO ACADEMIC YEAR 2015/2016 Norwegian version

MAN 1582/1583/1584/1585 Corporate Financial Management

Responsible for the course
Geir Bjønnes

Department
Department of Financial Economics

Term
According to study plan

ECTS Credits
30

Language of instruction
Norwegian and english

Introduction
This program will give students an insight into modern financial strategy that is both practical and useful for a company's long-term survival and growth.

Learning outcome
The programme gives participants a useful, relevant education with thorough specialist study in an area which is of vital importance to the ability to survive and growth of companies. After completing the programme, participants will be well equipped to influence and make investment and financing decisions to the benefit of the company. Central issues such as how decisions affect the value of a company will be dealt with. In order that participants have the necessary background to be able to make rational decisions when the unexpected occurs, importance is attached to how uncertainty affects decision-making rules.
The aim is for the participants who take the course to become important resource persons and managers in their respective companies

Acquired knowledge:
Upon completion of the course, students should be able to:

• Understand the role of capital budgeting
• Understand the focus on cash flow as opposed to earnings
• Understand why risk analysis plays such an important role in modern finance
• Understand how the capital stucture and dividend decision can influence firm value
• Understand which factors affect the value of a company
• Understand the main models of financial securities valuation
• Understand how financial theory/financial models can be used for risk management
• Understand which additional factors that need to be included when evaluating international investment and/or financial decisions

• When the tool is given, be able to apply the tool correctly
• Based on simple situation descriptions, choose the right tool and apply it correctly
• Based on more complex situation descriptions, be able to produce relevant information, link it to the suitable tool and apply the tool correctly

Prerequisites
Bachelor degree or equivalent and 4 years work experience. A college education in economics/administration (equivalent to a BBA), engineering or equivalent will give a good starting point. Such background can be compensated through relevant work experience.

Compulsory reading
Books:
Bodie, Zvi, Alex Kane, Alan J. Marcus. 2014. Investments. 10th global ed. McGraw-Hill Education
Eun, Cheol S., Bruce G. Resnick. 2014. International finance. 7th global ed. McGraw-Hill Education
Hillier, David ... [et al.]. 2013. Corporate finance. 2nd European ed. McGraw-Hill
Koller, Tim, Marc Goedhart, David Wessels. 2010. Valuation : measuring and managing the value of companies. 5th ed. Wiley
Stulz, René M. 2002. Risk management & derivatives. Thomson South-Western

Recommended reading
Books:
Boquist, John A., Todd Milbourn, Anjan Thakor. 2010. The value sphere : the corporate executives' handbook for creating and retaining shareholder wealth. 4th ed. World Scientific Publishin
McDonald, Robert L. 2014. Derivatives markets. 3rd ed., New international ed. Pearson Education

Course outline
1st Investment decisions
2nd Financing decisions
3rd Valuation
4th Financial investments
5th Financial risk management
6th International finance

Computer-based tools
None.

Learning process and workload
The programme is conducted through five course modules, a total of 150 lecturing hours.

Project tutorials differ in each Master of Management program. It will consist of personal tutorials and tutorials given in class. Generally the students may expect consulting tutorials, not evaluating tutorials. The total hours of tutorials offered is estimated to two hours pr. students following an ordinary Master of Management program. For students taking the program as their final Master of Management program the tutorials offered are estimated to a total of six hours per term paper.


Examination
The students are evaluated through a term paper, counting for 18 credit hours and process evaluation, counting for 12 credit hours. The process evaluation consists of case and class participation where each element accounts for 50% of the grade in the process evaluation, 12 credits. Both evaluations must be passed to obtain a certificate for the program.The term paper may be written individually or in groups of maximum three persons.

For students taking this program as the final Master of Management Program the following applies:
The students are evaluated through a individual term paper counting for 24 credit hours and process evaluation, counting for 6 credit hours. The process evaluation consists of case and class participation where each element accounts for 50% of the grade in the process evaluation, 6 credits. Both evaluations must be passed to obtain a certificate for the program. The term paper may be written individually or in groups of maximum two persons.
Examination code(s)
MAN 15821 - Term paper; 18 credits; counts for 100 % to pass the program MAN 1582.
MAN 15831 - Process evaluation; 12 credits; counts for 100 % to pass the program MAN 1583.
Both evaluations must be passed to obtain a certificate for the program.

For students taking this program as the final Master of Management Program the following applies:
MAN 15841 - Term paper; 24 credits; counts for 100 % to pass the program MAN 1584.
MAN 15851 - Process evaluation; 6 credits; counts for 100 % to pass the program MAN 1585.
Both evaluations must be passed to obtain a certificate for the program.

Examination support materials


Re-sit examination
At the next ordinary exam. When course evaluation consists of process elements, the whole course must me re-evaluated when a student wants to retake a exam.

Additional information
The program consists of six modules and five sessions. Information about the different topics will be distributed during the first session, and on Itslearning.


Topic 1 - INVESTMENT DECISIONS
This module provides basic insight into the theoretical and practical aspects of investment decisions.

Topic Overview
Cash flow
Capital Budgeting
Project Analysis under no uncertainty
Compounding and discounting rules/mathematical finance
Risk and required rate of return


Topic 2 - FINANCING DECISIONS
This module studies a company’s capital structure decision, and its cost of capital. Furthermore, this session provides basic knowledge in theories of corporate financial decisions.

Topic Overview
Long-term financing
Leverage and risk
Capital structure
Adjusted Present Value method
Dividend Decisions
Option pricing


Topic 3 - VALUATION
The purpose of this module is to train participants in valuation. We use the theoretical modules studied in previous modules, and focuses on how the various tools can and used in a specific valuation situation.

Topic Overview
Accounting-based cash flow models.
Future earnings based on existing accounting results, future strategy and expected owner activity
Cost of capital in practice
Multipliers
Sequential and direct valuation of equity.


Topic 4 - FINANCIAL INVESTMENTS
The purpose of this module is to increase our understanding of the relationship between financial markets and pricing of various financial instruments. Emphasis will be placed on managing the trade-off between expected return and risk by using financial theory.

Topic Overview
Financial markets risk and expected return
Market efficiency
Valuation of stocks
Valuation of other securities (bonds, options, futures)
Portfolio management


Topic 5 - FINANCIAL RISK MANAGEMENT
The purpose of this module is to identify the company's risk profile, and how to handle the identified risk.

Topic Overview
Financial risk management; what is it?
Investment decisions and capital structure
Forward and futures contracts
Risk reducing strategies
Identification and measurement of risk
Swap contracts
Financial contracts and attitude toward risk
Options

Topic 6 - INTERNATIONAL FINANCE
This module presents basic models in international finance.

Topic Overview
The international framework
Pricing of currency
Currency risk management
International investments and financing