ØABED4000 Corporate Finance Course description

We start the course with an introduction to basic theoretical elements needed to understand investment decision rules, corporate policy decisions and capital budgeting/valuation. Then, we move forward to the topic of investment under uncertainty, which provides the main theoretical and methodological insights on portfolio selection, the capital asset pricing model (CAPM model) and the cost of capital. This topic is covered in more depth in the ØABED3500 "Investments" course. The topic of Capital Structure builds on the cost of capital to provide a deep understanding of optimal corporate policy decisions, in regards to capital structure, investment and payout policy, in the presence of market imperfections. We also cover the interlinkages with operating decisions and other investment decisions of the firm by developing the intuition on working capital management, leasing and risk management. The last topic draws on all of the above to cover more advanced valuation with leverage and capital budgeting. This last topic provides the grounds for the ØABED3700/4100 "Valuation" course.

Language of instruction is English.

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After completing the course, the student should have the following overall learning outcomes defined in terms of knowledge, skills and general competence:

Knowledge

The student has

• advanced knowledge of key topics in corporate finance, including; theories, tools and methods within the field
• a deep understanding of the role of corporate finance in society and its interrelations with other disciplines

Skills

The student is able to

• analyze existing theories, methods and interpretations within financial management and work with complex practical and theoretical problem solving
• analyze and relate critically to various sources of financial information and use these to structure and formulate professional reasoning
• set the grounds to carry out an independent, limited research project under supervision (e.g., a sketch of the research proposal for the master thesis)

General competence

The student is able to

• to apply their knowledge and skills (theory & tools) in new areas to carry out advanced work tasks and projects ("real life" setups)
• to convey extensive independent work as well as to work in teams
• to communicate about professional issues, analyses and conclusions, both with specialists and to the general public
• be aware of new thinking and innovation trends in the field

The course activities will include:

• topics and learning activities that will be covered each week:
  • either at home before the lecture (FLIP) or
  • in the classroom/zoom/streaming (CZS) during the lecture,
• tools/inputs to use (EXCEL)

As a general idea, students will be asked to prepare some theoretical and/or practical material every week. Then, during the lectures (CZS), students are expected to actively participate and to generate discussion in the different learning activities (e.g., practical exercises, case/paper discussion, presentations, and should be prepared to work in teams as part of the learning process. When cases are discussed during lectures or as part of the coursework (CW), students can expect to get a partial solution to the case when the discussion is over.

The teaching is coordinated with ØABED3000.

The following coursework requirements must have been approved in order for the student to take the exam:

• Coursework 1: Tools, excel templates. The students will take the tools proposed in the classroom and will adapt those tools to different setups in a practical excel exercise. They will build a DCF valuation model.
• Coursework 2: Research Paper Analysis. Students will be asked to make a presentation of a research paper. Students will present the main take-homes to the rest of the class. The presentation will last approximately 15 minutes.
• Coursework 3: Stylized Facts from Research Data. Students will be assigned a Stata database and will be asked to provide stylized facts (e.g., graphs) related to the content of the research paper in Coursework 2.

Both coursework requirements will be done in groups of 4-5 students.

All required coursework must be completed and approved by the given deadline in order for the student to take the exam. If one or more coursework requirements have not been approved, the student will be given one opportunity to submit an improved version by the given deadline.

The exam in the course is a supervised exam of 2 hours.

The following aids are permitted:

• Excel
• All handwritten and printed support material
• Calculator (see regulations for the use of calculators in the programme description)

Grade scale A-F

An internal and an external examiner will grade the exam.

A selection of at least 25% of the exam papers will be assessed by two examiners. The grades awarded to exam papers assessed by the external and internal examiner will be used to determine the level of all exam papers.

Students who have the subject ØABED3000 Corporate Finance in their bachelor's degree are not allowed to take this course.