English   Danish

2020/2021  KAN-CPHIV1801U  Modern Finance and Corporate Finance

English Title
Modern Finance and Corporate Finance

Course information

Language English
Course ECTS 7.5 ECTS
Type Elective
Level Full Degree Master
Duration One Quarter
Start time of the course First Quarter
Timetable Course schedule will be posted at calendar.cbs.dk
Max. participants 60
Study board
Study Board for BSc/MSc in Business Administration and Philosophy, MSc
Course coordinator
  • Thomas Poulsen - Department of Accounting (AA)
Main academic disciplines
  • Corporate governance
  • Finance
  • Cultural studies
Teaching methods
  • Face-to-face teaching
Last updated on 24-01-2020

Relevant links

Learning objectives
The purpose of the course is to provide students with a solid knowledge of theories and models of investment issues and financial problems of firms. At the end of the course, they are expected to:
  • Understand whether and where to invest a firm’s resources
  • Analyze what the funding options are and what the best option may be
  • Understand why firms and financial markets behave the way they do
  • Be able to analyze how corporate decisions are influenced by agency problems and how they can be solved
Course prerequisites
The course is part of the Minor: “Financial Decision-Making in a Social Context: History, Sociology, Behavioral Finance and Corporate Finance”.
Examination
Modern Finance and Corporate Finance:
Exam ECTS 7,5
Examination form Home assignment - written product
Individual or group exam Individual exam
Size of written product Max. 10 pages
Assignment type Essay
Duration 72 hours to prepare
Grading scale 7-point grading scale
Examiner(s) One internal examiner
Exam period Autumn and Autumn
Make-up exam/re-exam
Same examination form as the ordinary exam
Description of the exam procedure

Please note that this course is part of the Minor “Financial Decision-Making in a Social Context: History, Sociology, Behavioral Finance and Corporate Finance”. The exam form listed above refers only to students who takes the course "Modern finance and corporate finance" as an elective. For students who sign up for the full minor, the exam form will be different. 

Course content, structure and pedagogical approach

The modern intellectual history of finance dates back to around 1950. Since then, the major theoretical building blocks of today’s orthodoxy have been formulated. These are: Efficient market theory, which is the analysis of equilibrium behavior of price changes through time in speculative markets; Portfolio theory, which is the analysis of optimal security selection procedures for an investor’s entire portfolio of securities; Capital asset pricing theory, which is the analysis of the determinants of asset princes under conditions of uncertainty; Option pricing theory, which is the analysis of the determinants of prices of contingent claims; and Agency theory, which is the analysis of the control of incentive conflicts in contractual relations.

 

The development of a body of theory addressing these questions has evolved over time in roughly this order, and it has to a large extend metamorphosed into three major areas of corporate financial policy: Capital budgeting, which relates to how firms make investment decisions; capital structure, which relate to how firms finance their investments; and dividend policy, which relates to how firms distribute the return on their investments.

 

One aim of the course is to provide students with a solid knowledge of these theories and models, and to practice related analytical skills, so that they are able to both understand and evaluate financial problems using state of the art knowledge and techniques. At the same time, another aim of the course is to facilitate a reflexive discussion about the complexities in these problems, drawing on the other courses in the minor as well as the students’ academic background in general. Related to this cross-fertilization of courses, the major areas mentioned above are intimately related to the simultaneous development of more advanced financial markets and financial institutions, and this is probably where the other courses in the minor most significantly adds to this particular course.

 

Another important mechanism that has become increasingly important in modern finance, partly driven by innovations in the financial market (in light of the need to analyze a growing range of information originating from a riskier and more uncertain environment), as well as globalization and deregulation, is mergers and acquisitions and the reengineering of corporations that follows from this. This topic will also be an important part of the course; it is also a topic representative of the fact that the development of modern finance reflects the issues and challenges of each time. Over time, it has incorporated many concepts, and among the most recent and active ones are some that makes corporate finance highly relevant for our students: aspects of human psychology and neuroscience, sociology, and ethics, amongst others.

 

By now, as the result of a historical process, one may state that the role of modern corporate financial policy is to maximize shareholder value by means of investment, funding, and dividend policies, with constant evaluation of risk–return factors, capital costs, and balance in the company’s relationship with its investors and other stakeholders, within the context of corporate governance and social and environmental responsibility.

 

Description of the teaching methods
The course will be taught as a mixture of lectures and class dicussion, group presentations and case-based discussion.
Feedback during the teaching period
Feedback in relation to lectures and cases is integrated into the respective classes. In relation to group presentations each group will receive feedback to and evaluation of their presentation.
Student workload
Class teaching 30 hours
Preparation for class 146 hours
Preparation for exam 30 hours
Further Information

Please note that this course is part of the Minor “Financial Decision-Making in a Social Context: History, Sociology, Behavioral Finance and Corporate Finance”. The exam form listed above refers only to students who takes the course "Modern finance and corporate finance" as an elective. For students who sign up for the full minor, the exam form will be different. 

Expected literature

Berk, J., P. DeMarzo (2017). Corporate Finance, 4th Edition (Global). Pearson

A few topical pages or chapters from other books

A few journal articles

 

Last updated on 24-01-2020