Corporate Finance
Study Board of Market and Management Anthropology, Economics, Mathematics-Economics, Environmental and Resource Management
Teaching language: English
EKA: B500029102
Censorship: Second examiner: None
Grading: 7-point grading scale
Offered in: Odense
Offered in: Autumn
Level: Bachelor
Course ID: B500029101
ECTS value: 5
Date of Approval: 28-04-2020
Duration: 1 semester
Course ID
Course Title
Teaching language
ECTS value
Responsible study board
Study Board of Market and Management Anthropology, Economics, Mathematics-Economics, Environmental and Resource Management
Date of Approval
Course Responsible
Offered in
Level
Offered in
Duration
Mandatory prerequisites
Recommended prerequisites
Mathematics corresponding to B-level from Upper Secondary School.
Furthermore, the student must understand and be able to apply central concepts from introductory statistics such as: sampling and sampling distributions; descriptive statistics; elementary probability rules; discrete and continuous random variables and respective theoretical distributions (e.g. Normal, Binomial); expected values (the mean), variance, covariance, and correlation; confidence intervals; hypothesis testing; linear regression; and the student must be able to apply these concepts independently in concrete problems. These competences have typically been obtained in Social and Economic Statistics (course id: 9851401). In addition, the student must be able to perform basic operations in a spreadsheet program like Microsoft Excel or a statistical analysis package like STATA.
Aim and purpose
The purpose of the course is to provide the student with knowledge about investors’ and corporations’ financial decision problems subject to uncertainty regarding the economic consequences in the future caused by financial decisions.
Financial decisions require knowledge of the financial market, its instruments, and the valuation of these. Financial problems are, e.g., investors’ portfolio choice and corporations’ capital budgeting (real investment) and capital structure decisions.
When working with anthropology and markets, it will often be relevant to be able to analyze market projects, their cash flows and the financing of these projects.
The course provides sufficient knowledge within finance for enrolment in the cand.merc. programme offered at SDU.
Content
The subject covers three main areas: 1) Interest rates and time value of money, 2) Financial markets, financial instruments and pricing of these and 3) Valuation of real assets, companies' investment choices and capital structure.
Main themes are as follows:
1. Interest rates and time value of money:
- Discounting, annuities and perpetuities.
- Internal rate of return and effective yield.
- Accrual of interest and interest compounding.
- Discrete and continuous rates.
2. Financial markets, financial instruments and their pricing:
- Capital market efficiency.
- Optimal portfolio choice (risk vs. return: choosing an efficient portfolio of securities) under uncertainty.
- Mean-variance analysis.
- Pricing of financial assets (securities eg. Stocks and bonds) under uncertainty.
3. Valuation of real assets, firm’s choice of investment (capital budgeting), and capital structure:
- Valuation of risk free assets and projects.
- Valuation of risky assets and projects.
- Choice of real investment and (simple) tax effects in valuation.
- Capital structure theory in a Perfect Market and Costs of Capital.
Please notice that the content of the subject predominantly takes its point of departure in an international context. This is evident from the literature foundation of the subject.
Learning goals
The student must be able to account for theory and carry out analyzes in relation to the subject content (see below).
Description of outcome - Knowledge
1. Interest rates and time value of money:
- Explain the concept time value of money.
2. Financial markets, financial instruments and their pricing:
- Explain, apply and assess the importance of the Law of One Price.
- Explain the functioning of the capital market and its importance to the pricing of financial assets, including making simple analyzes based on the Law of One Price.
Description of outcome - Skills
1. Interest rates and time value of money:
- Calculate value of cash flows (e.g. PV and NPV of cash flows)
- Calculate internal rate of return and effective yield.
- Carry out calculations relating to interest rate in cases of non-annual terms of payments, e.g., with continuous compounding.
2. Financial markets, financial instruments and their pricing:
- Can perform simple bond analyses, valuation and term structure analyses.
- Valuing stocks taking into account, inter alia, systematic and non-systematic risk and various risk factors.
- Can analyze an investor’s portfolio choice under uncertainty in simple settings (eg. mean-variance analysis) including CAPM and Multifactor Models of Risk.
3. Valuation of real assets, corporations’ choice of investment (capital budgeting), and capital structure:
- Identify and analyze cash flows for real investments based on an incremental perspective.
- Identify, calculate and analyze the optimal capital structure of a firm, both without and including taxes and tax shields.
- Determine, calculate and analyze the cost of capital of a firm by including, inter alia, capital structure and systematic risk (beta).
- Carry out valuation of real investments both without and including tax and debt
Description of outcome - Competences
When accounting for theory and doing the analysis, the student must be able to explain very clearly the preconditions and the individual elements of the analysis by means of explanatory text and by specifying the formulas used and explaining how they are used to solve the problems.
Literature
Examples:
Package including acces to MyFinanceLab and eText: ISBN-13: 9781292163031
The package includes the following:
- Corporate Finance, Global Edition, 4/E Berk & DeMarzo ISBN-10: 1292160160 • ISBN-13: 9781292160160 ©2017 • Paper, 1152 pp.
- Corporate Finance, Pearson eText, Global Edition, 4/E Berk & DeMarzo ISBN-10: 1292160217 • ISBN-13: 9781292160214 ©2017 • Online.
- MyFinanceLab - Instant Access - for Corporate Finance, Global Edition, 4/E, Berk & DeMarzo ISBN-10: 1292160233 • ISBN-13: 9781292160238.
Teaching Method
The purpose of the lectures is to provide an overview of the subject's theory and methods and to provide knowledge about the key concepts and contexts. Furthermore, the lectures are organized and conducted to support a suitable academic progression during the semester. This ensures that the students are given a solid academic foundation for their studies. In the exercise classes, students will be helped to solve the exercises. The students will be helped to identify and use the correct methods when solving the exercise problems. The students' own efforts will be an essential foundation for the teaching in exercise classes. It is therefore expected that the students, before attending the exercises, have attempted to solve all the exercises.
Workload
Scheduled classes:
2x2 lecture hours for 5 weeks, 1x2 lecture hours for the following 10 weeks and 2 class exercises per week for 15 weeks. Minor variations in the scheduled classes can occur in the weeks where an online webinar is offered.
In 3 of the teaching weeks, there will be conducted an online 2-hour webinar via Adobe Connect. The specific weeks will be stated in the lecture plan uploaded on Blackboard. In the weeks where the webinar is conducted there will be 3 lecture hours (2+1) and 1 class exercise.
The ECTS is 5 equaling 135 SAT, broken down as follows:
Lectures including preparation: 60 hours.
Exercises and MCQ-tests including preparation: 60 hours.
Exam including preparation: 15 hours.
Examination regulations
Examination
Name
Examination
Timing
Exam: January
Reexam: February
Tests
Exam
Name
Exam
Form of examination
Written examination on premises
Censorship
Second examiner: None
Grading
7-point grading scale
Identification
Student Identification Card - Exam number
Language
English
Duration
3 hours.
Length
No limitations.
Examination aids
The Internet may only be used to access the SDU Assignment upon submission. All aids allowed except for use of the internet. Communication with others inside or outside the examination room are not allowed.
Assignment handover
In the examination room.
Assignment handin
SDU Assignment on Blackboard.
ECTS value
5
Additional information
A passed exam or part-exam cannot be re-taken. A passed part-exam will be transferred to the next exam period.
The exam tests the achievement of the goals for all the goals mentioned (cf. the goal description) by random check.
The exam-questions will be formulateed by the teacher of the course.
EKA
B500029102
External comment
NOTE - This course is identical with the former course Corporate Finance, 8111421.
Courses that are identical with former courses that are passed according to applied rules cannot be retaken.
The student is automatically registered for the first examination attempt when the student is registered for a course or course element with which one or more examinations are associated. Withdrawal of registration is not possible, and students who fail to participate in an examination have used one examination attempt, unless the University has made an exemption due to special circumstances.
The form of reexam is subject to change. The students are informed about the change in format after the students have signed for the reexam.
Since the Multiple Choice Question-part exam (B500014112) is no longer part of the course, the exam will be offered for the last time during the fall semester 2019 and in February 2020.
SPECIAL CONDITIONS FOR THE EXAMS IN WINTER 20/21:
Examinations will be conducted online.
Courses offered
| Offer period | Offer type | Profile | Education | Semester |
|---|---|---|---|---|
| Fall 2020 | Optional | BA negot Tysk, 180 ECTS, Optag 2018 | Bachelor of Arts (BA) in Business, Language and Culture (English), Bachelor of Arts (BA) in Business, Language and Culture (German) | Odense | |
| Fall 2020 | Optional | BA negot Engelsk, 180 ECTS, Optag 2018 | Bachelor of Arts (BA) in Business, Language and Culture (English), Bachelor of Arts (BA) in Business, Language and Culture (German) | Odense | |
| Fall 2020 | Optional | BA negot Tysk, 180 ECTS, Optag 2019 | Bachelor of Arts (BA) in Business, Language and Culture (English), Bachelor of Arts (BA) in Business, Language and Culture (German) | Odense | |
| Fall 2020 | Optional | BA negot Engelsk, 180 ECTS, Optag 2019 | Bachelor of Arts (BA) in Business, Language and Culture (English), Bachelor of Arts (BA) in Business, Language and Culture (German) | Odense | |
| Fall 2020 | Optional | BSc Market and Management Anthropology - Year 2016 | BSc in Market and Management Anthropology | Bachelor of Science in Market and Management Anthropology | Odense | |
| Fall 2020 | Optional | BSc Market and Management Anthropology - Year 2017 | BSc in Market and Management Anthropology | Bachelor of Science in Market and Management Anthropology | Odense | Fall 2020 | Exchange students |
Teachers
| Name | Department | City | |
|---|---|---|---|
| Steffen Meyer | stme@sam.sdu.dk | Institut for Virksomhedsledelse og Økonomi | Odense |