2293.22 - Corporate Finance

Course number
Corporate Finance
Pass grade in Mathematics B at the upper secondary level.
The course aims to provide students with an introduction to the core theories and current practice of Corporate Finance in a modern world. The major goal of this course is to help students understand the economic mechanism of corporate finance and will provide students with a basic analytical framework of financial markets and processes.
The course focuses on the role and functions of Financial Economics on a corporative level. Key topics covered include: • Risk and risk assessment under uncertainty • Fixed income analysis – how to value Bonds • The basic principles of the Common Stock valuations • The patterns of corporate financing • Payout policy – how does a firm decide on dividend payments • Capital Structure – Debt & Equity • Capital Assets Price Model (CAPM) • Derivative calculations (calls, puts, futures, forwards, swaps) • Management of international risks (hedging currency risk)
Learning and teaching approaches
2 ½ lecture hours + 2 ½ hours of exercise per week for 14 weeks The module lectures will cover specific economic concepts and definitions applicable to financial economic theories and its criticism. During lecture time students will independently engage in solving various numerical problems that correlate with specific concepts covered during the lecture. Exercise hours are to provide students with applied usage of financial concepts using project examples in Excel. Students will work both independently and in groups starting off with the basics, and gradually progress to a more advanced levels of financial analysis and financial modelling.
Learning outcomes
On successful completion of the course, students can demonstrate ability to: • Explain the stylized facts of Capital Markets functioning • Explain the most important aspects of Portfolio Theory and application of Capital Assets Price Model (CAPM) in financial management • Critically evaluate the Theory of Efficient Markets • Describe and reflect on the concept of Fixed Income Securities in relation to risk and values • Use the Cash-flow analysis, Dividend Discount Model (DDM) and market multiplies techniques to value Common Equities • Review the Payout Policy strategies • Analyze the key similarities and differences between Forward and Future Contracts • Review international capital investment decisions and define Currency Risks Demonstrate an understanding of Option pricing with the Binomial and Black-Scholes models
Assessment method
Oral Examination (viva voce). Student will choose one set of questions and will be given time to prepare the exam answers During the preparation time, students will have access to the textbook and lecture materials, but not to the Internet and mobile phones. The preparation time is 40 minutes and the examination is 20 minutes.
Marking scale
Textbook, “The principle of Corporate Finance”, Brealey, Myers and Allen, McGrawHill Education, 13th edition (Approximately 140 pages in total) Lecture Handouts in power point and tutorial material in excel will be available on Moodle.
Mrdalo Zvonimir Pero Duro