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2012/2013  BA-HAI_2CF  Corporate Finance

English Title
Corporate Finance

Course information
Language English
Exam ECTS 7.5 ECTS
Type Mandatory
Level Bachelor
Duration One Quarter
Course period Spring, Third Quarter
Time Table Please see course schedule at e-Campus
Study board
Study Board for BSc in International Business
Course coordinator
  • Ulf Nielsson - Department of Finance
Main Category of the Course
  • Finance
Last updated on 28-08-2012
Learning objectives
At the exam the students must be able to:
  • Describe the various types of risks related to a corporation and how these impact the investment and financing decision.
  • Be able to apply various techniques for valuation of projects and corporations taking the riskiness of these into account.
  • Describe financial options and apply financial options for hedging and risk management.
  • Describe real options and the roles of real options in project valuation.
  • Demonstrate an understanding of a firm’s payout policy and of mergers and acquisitions.
  • Explain the various ways by which corporations, including multinational corporations, obtain the information that is needed for the investment and financing decision.
Examination
.
Corporate Finance:
Type of test Written Exam
Marking scale 7-step scale
Second examiner No second examiner
Exam period Spring Term and August, the regular exam takes place in March/April. The make-up and re-examination takes place in August.
Aids Please, see the detailed regulations below
Duration 4 Hours
This is an open book exam meaning that all material is allowed (textbook, personal notes, lecture slides, exercise solutions, articles from the Economist, calculator, etc.). An exception is any electronic device that makes it possible to communicate with others (e.g. all other calculators are allowed).
Examination
The Make-up and Re-examination takes place according to the same rules as the regular exam.
Course content

This is an introductory course in finance focusing on corporate applications in the international environment. It covers the basic theories of interest rates, valuation of streams of cash flows, pricing of risk, and it draws practical implications for capital structure, project valuation, financing, and risk management.

More specifically, the course contains a basic introduction to topics such as:
The main characteristics of corporations
The relationship between accounting information and the information analysed in corporate finance
Interest rates and the time value of money
The valuation of bonds and stocks
The investment decision
The financing decision including capital structure theory and the cost of capital
Payout policy
Mergers and acquisitions
International financial mangement and capital budgeting
Financial and real options
Risk management

Thereby, the course reflects the BSc IB program learning goals in the following way:

Practical Application of Theory
The course includes many exercises and cases illustrating the practical application of theory. In particular, this is achieved both through lectures (illustrating practical applications) and assigned readings from The Economist.

Relation to a Business or an Institutional Setting
Several aspects of different types of financial markets are examined including public versus privately owned companies and various types of providers of capital (investors).

Relation to International Business or Economics
The international perspective is taken in connection with many of the topics covered during the course especially including mergers and acquisitions, financial management and capital budgeting, and risk management. Several examples are looking at multinational firms.

Research Based Teaching
The curriculum includes articles that summarize several research papers and ties such research to the practical use of the theoretic methodologies introduced in the course. Furthermore, evidence from several empirical studies is discussed during the course.
Teaching methods
The class time will be devoted to a combination of lectures, discussions of different exercises and minor cases. Exercises and cases will be home-work assignments during the course. They will not be graded but discussed in class. The material is large and well explained in the book. Therefore, students are expected to study parts of the material on their own and, as a minimum, to have read through the material and tried to solve exercises/cases assigned as home-work in advance.
Student workload
Lecture hours 42 hours
Class and exam preparation 183 hours
Expected literature
Brealey, Myers and Marcus, Fundamentals of Corporate Finance, 7th edition (or newer, if available at start of course), (Mc Graw Hill International Edition).

Other readings will be made available on Learn. These readings will at least include the following articles from The Economist:
- “The grand illusion”, March 5th 2009
- “Diversification”, October 7th 2009
- “Taking stock”, June 5th 2003
- “Debt is good for you”, January 25th 2001
- “Dividends’ end”, January 10th 2002
- “From buy-backs to sell-backs”, June 19th 2008
- “Synergy”, August 27th 2009
- “The age of hostility”, September 15th 2009
“Keeping all options open”, August 12th 1999

Please note, minor changes might occur. The teacher will upload the final reading list to Learn two weeks before the course starts.
Last updated on 28-08-2012