ØABED3000 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.

None

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

Knowledge

The students has

• broad knowledge of key topics in corporate finance, including: theories, tools and methods within the field
• understanding of the role of corporate finance in society

Skills

The student is able to

• apply professional knowledge and relevant results from research to practical and theoretical issues in order to take informed decisions
• to reflect on their own professional practice (in finance or non-finance profiles)
• to find, evaluate and refer to information and use it to shed light on basic finance issues
• to use basic professional tools and techniques

General competence

The student

• has insight into relevant professional and ethical issues related to finance
• is able to plan and carry out varied work tasks and projects that extend over time, alone and as a participant in a group
• is able to convey key theories, problems and solutions both in writing, orally and through other relevant forms of expression
• is aware of new thinking and innovation trends present 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 ØABED4000.

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 adapt those tools to different setups in a practical excel exercise. Using Financial Statement Information available at the SEC, students will compute the main financial ratios and derive the value of the firm using relative valuation.
• Coursework 2: "Real-life" case presentation. The students will be asked to make a presentation of a given "real-life" financial management challenge using a business case. Students will also be able to present a research paper instead. Students will present the main take-homes to the rest of the class. The presentation will last approximately 15 minutes.

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 written 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

The exam papers are assessed by one internal and one external examiner.

At least 25% of the exam papers will be assessed by two examiners. The grades awarded for the papers assessed by two examiners form the basis for determining the level for all the exam papers.