IB9Y7-15 Corporate Finance
Introductory description
To provide students with advanced level knowledge of Corporate Finance problems and how to tackle them.
Module aims
To provide students with MSc Finance level knowledge of Corporate Finance problems and how to tackle them. The goal is that students be equipped to apply state of the art ideas of modern Corporate Finance theory as well as the quantitative tools to solving the types of problems faced by CFOs and other business executives who must make investment, financing, risk management, and payout decisions taking account of flexibility and discretion under uncertainty, tax consequences, and financing effects. Students will also be able to trace the effects of considerations such as corporate and personal taxes, bankruptcy costs, information signaling, and conflicts of interest on investment decisions and on financial structure decisions. Finally, students will understand the use of option- pricing techniques in corporate finance to evaluate corporate securities and investment projects. NOTE: This module has been developed alongside IB9EM Corporate Financial Management (the MSFE and MSAF version of this module). In the past they were taught together, however in recent years CFM has been developed as a somewhat lighter and slower-paced module to reflect the fact that the FE and AF students have a slightly less strong finance background.
Outline syllabus
This is an indicative module outline only to give an indication of the sort of topics that may be covered. Actual sessions held may differ.
Valuation
Financing and capital structure
Capital structure and frictions
Capital structure and incentives: financial contracting
Capital budgeting: foundations
Capital budgeting: extensions
Capital budgeting: real options
Corporate risk management
Payout policy and cash management
Corporate governance
Learning outcomes
By the end of the module, students should be able to:
- Discuss the key issues involved in capital budgeting, capital structure, risk management, payout and governance decisions.
- Assess models and theories of the above described decisions, vis-a-vis empirical evidence, in different context and assumptions.
- Critically evaluate different techniques for the above listed problems, so to use the best approach given the circumstances of each corporate finance problem.
Indicative reading list
The core reading for this module consists of selected chapters from:
Berk, J., and P. DeMarzo “Corporate Finance,” 4th (global) edition Pearson;
and notes prepared by the lecturer.
For a lower level preparatory reading (for those who have not taken any corporate finance before)
Hillier, D., S. Ross, R. Westerfield, J. Jaffe, and B. Jordan“Corporate Finance,” 2nd (European) edition. McGraw Hill.
Subject specific skills
Use modern valuation techniques to solve problems in capital budgeting, capital structure, risk management, and payout decisions.
Transferable skills
Written skills.
Problem solving.
Study time
| Type | Required |
|---|---|
| Lectures | 10 sessions of 2 hours (13%) |
| Seminars | 9 sessions of 1 hour (6%) |
| Private study | 121 hours (81%) |
| Total | 150 hours |
Private study description
Self-study to include assessment preparation and pre-reading for seminars and lectures
Costs
No further costs have been identified for this module.
You do not need to pass all assessment components to pass the module.
Assessment group D6
| Weighting | Study time | Eligible for self-certification | |
|---|---|---|---|
Assessment component |
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| In-class test | 25% | No | |
Reassessment component is the same |
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Assessment component |
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| 3 hour examination (January) | 75% | No | |
Reassessment component is the same |
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Feedback on assessment
Feedback via My.WBS
Courses
This module is Core for:
- Year 1 of TIBS-N300 MSc in Finance