BØK 1322 Finance II
This course introduces students to advanced topics in corporate finance such as the issuing process of corporate securities, the capital structure of firms, and the implications of financial structuring for the value of firms. The course presents a framework for analyzing firms’ financing and capital structure choices. Students will solve exercises and case studies in order to enhance their understanding of the covered topics.
Upon completion of the course, students are required to master tasks such as:
- The capital structure decision; how corporations are financed and how they pay out dividends.
- Why capital structure decisions cannot impact valuation in perfect markets.
- Market efficiency and why efficiency in financial markets is important for these decisions.
- How to issue new debt and equity, and the choice between these two alternatives.
- Computing how taxes and other impediments to perfect markets influence firms' cost of capital.
- The decision of whether to buy or lease-
- Computing option-derived valuations of corporate debt and equity.
- Computing gains and costs from corporate financial management.
- The gains and losses from merger and acquisition activity.
- Risk management and issues in international finance.
- Students having completed the course are required to satisfactorily conduct analytical exercises such as:
- Explaining the impact of corporate capital restructurings in terms of operational choices and strategies.
- Explaining the impact of corporate capital restructurings in terms of signaling private information on future business prospects to capital markets.
- Explaining why debt and equity finance may initiate conflicts of interest between major corporate stakeholders.
- Explaining why financial risk management activity may enhance the corporate sector's overall stability and thus profitability.
- Explaining why options are valuable.
- Explaining costs and benefits from mergers and acquisitions.
The students should be able to understand the importance of the models underlying assumptions. They should be able to discuss whether the assumptions are reasonable in the real world, and what may happen if the assumptions are violated. The students should also be able to see the relevance of the theory when confronted with real-world issues
Part I: Financing
- Long Term Financing
- Debt or Equity?
- Capital Budgeting: APV
- Dividend Policy
Part II: Topics in finance
- Issuing Securities
- Derivatives and Risk Management
- Merger and Acquisition Strategy
The instruction consists primarily of presentations and discussions of the readings assigned to the topics listed above. Students are expected to have read the material before each class meeting.
Relevant problems that will be discussed in class will be formulated. In this case, students are expected to solve the problems before each class meeting.
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/It's Learning or in the textbook.
The course consists of 36 lecture hours and 6 hours of, instructor-guided problem solving in class.
Students are recommended to use computer-based tools, such as spreadsheets and statistical software. Such tools, however, are not allowed at the examination.
Deviations in teaching and exams may occur if external conditions or unforeseen events call for this.
|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
Student's own work with learning resources
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.