In the course Finance for Premasters students will be introduced to the main concepts of modern corporate finance. After successful completion of this course, students will be able to:
Calculate the value of a risky asset using the Law of One Price.
Evaluate the profitability of a risky investment using the Net Present Value method.
Explain the three Modigliani-Miller propositions.
Select the optimal mix of debt and equity financing and the most convenient way to compensate shareholders.
Compare different long- and short-term financing instruments.
Compute the price of options.
Analyze mergers & acquisitions.
Identify the risks born by the firm and calculate the break-even premium.
This course starts with an introduction to the concepts of time value of money and the evaluation of risk, and their role regarding valuation. To implement these concepts we will use the Net Present Value method for which we need two ingredients: cash flows and cost of capital. How to identify the former through various alternatives and how to compute the latter using the Capital Asset Pricing Model complete the first part of the course. The second part of the course focuses on the capital structure, that is, how the financing decisions of the firm affect its value. This topic leads to an introduction to financial derivatives and their relationship to debt and equity. Finally, the course considers some special topics in corporate finance: mergers and acquisitions, and risk management.|
The midterm exam and final exam each count for 37.5% for the final grade. The average grade of both exams should be greater than or equal to 5.0; otherwise, each exam will count for 50%. The research assignment counts for 25% for the final grade unless the average of both exams is below 5.0, in this latter case, assignments would not count. It is not possible to ‘repeat’ the research assignment. Their grades remain valid for the entire academic year. Therefore, for those students that take the Resit exam, it counts for 75% (+25% from the two research assignments) in the final grades if the grade of the exam exceeds 5.0; otherwise, it counts 100%.
The midterm exam covers BD chapters 3,4,5,6,9,10,11,12,28,30. The final exam covers BD chapters 14,15,16,20, 21, 23, 24, 25. Chapters 17 and 18 are assessed in the assignment.
There will be 20 quizzes in Canvas. 0.25 pts will be added to your grade if you pass 7 out of the 10 quizzes of the first part within the week they are posted, and another 0.25 if you pass 7 out of 10 quizzes of the second part within the week they are posted.
|Written test opportunities|
|Written test opportunities (HIST)|
|Midterm / Midterm||MIDTERM_01||SM 1||1||20-10-2020|
|Written 1 (37,5%) / Written 1 (37,5%)||EXAM_01||SM 1||1||11-12-2020|
|Written 2 (37,5%) / Written 2 (37,5%)||EXAM_02||SM 1||1||12-01-2021||Required materials|
|Title||:|| Corporate Finance|
|Author||:||Berk, J. and P. DeMarzo|
|Written 1 (37,5%)|
|Written 2 (37,5%)|