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2010/2011  KAN-OE13  Corporate Finance

English Title
Corporate Finance

Course Information

Language English
Point 7,5 ECTS (225 SAT)
Type Mandatory
Level Full Degree Master
Duration One Semester
Course Period Autumn
Time Table Please see course schedule at e-Campus
Max. participants 25
Study Board
Study Board for MSc in Advanced Economics and Finance
Course Coordinator
  • Ken Lamdahl Bechmann - Department of Finance
Main Category of the Course
  • Finance
Last updated on 29 maj 2012
Learning Objectives
Students are required to:
  • Be able to apply capital budgeting techniques and perform numerical calculations
  • Understand when and how the structure of financing and risk management matters for corporations
  • Understand how taxes affect the optimal capital structure
  • Understand optimal payout policy
  • Know how agency problems and asymmetric information affect the optimal capital structure and
  • Be able to apply theoretical insights in practical corporate finance contexts
Corporate Finance
Marking Scale 7-step scale
Censorship Internal examiners
Exam Period Autumn Term
The course will be graded based on two exams:
• Mid-term exam: 2 hours written exam – closed books (but approved calculator may be used). The
mid-term will be based on the content in lectures 1-5.
• Final exam: Oral exam (20 minutes) with initial preparation (20 minutes). The student draws a
question/topic and has 20 minutes to prepare his/her presentation. During the 20 minutes of
preparation the student may use all written exam aids as well as an approved calculator. Besides
from the calculator, no electronic aids may be used. The student may be asked, for example, to
present the main ideas in a relevant paper from the curriculum. The examination will focus on the
specific question/topic that the student draws, but the student may also be asked to relate his/her
answers to other relevant material from the curriculum.
The exams are graded using the 7-point scale. The course grade is a calculated average from the grades
from each exam using the weight 25% on the mid-term and 75% on the final. The weighted average is
rounded to the closest grade on the Danish scale in order to determine the grade for the course.
Once the student passes the course as a whole (i.e. obtains an average of minimum 02 calculated on the
basis of all the course grades) the exams cannot be retaken. However, the grade obtained in each
individual exam must be minimum 00 in order to be approved and form part of the calculated average.
Re-exam in the midterm will be organized as a 20 min. oral exam without preparation time. Re-exam in
the final exam will be organized as a 20 min. oral examination with 20 min. initial preparation.
The course does not make use of a second examiner on the midterm. The course makes use of a second
internal examiner on the midterm re-exam and the final exam and the oral re-exam.
Prerequisites for Attending the Exam
Course Content

The course provides students with a firm knowledge and understanding of issues of relevance for optimal capital structure choice and corporate financial policy. The following topics will be covered: Classical Modigliani-Miller propositions and the effect of taxation, optimal capital structure and dividend policy with agency issues and asymmetric information, capital budgeting/real options issues, and capital structure choice in dynamic settings. The course is a fundamental finance course. It complements the courses on Asset Pricing Theory and Corporate Governance.

Teaching Methods
The format of the course is based on the following elements:
• Class lectures devoted to the fundamental theoretical issues
• Student presentations of relevant journal articles
• Case analysis which is participation oriented
• Class exercises.

The main textbook can be bought in the CBS bookstore, online at different places, and probably also used, if you like. The articles will be uploaded on Sitescape in due time before class. All slides, exercises not in BMA etc. used for lectures will be uploaded on Sitescape before class. These slides will also be part of the required readings for the exam. In particular, the slides will clearly demonstrate what you should be focusing on when reading BMA or the assigned articles.