Introductory description

This is an elective module available for WBS and non-WBS students.

Students will understand principles underlying financial decision making by corporations. They will develop a solid understanding of financing and investment decisions; options, futures, forwards, warrants and convertibles; valuation techniques for investment appraisals. Some new corporate finance topics are introduced such as mergers and acquisitions, real options, and corporate risk management.

Module web page

Module aims

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.

• Cost of Capital
• Risky debt
• Capital Structure
• Payout Policy
• Company valuation
• Options
• International Corporate Finance
• Initial Public Offerings

Learning outcomes

By the end of the module, students should be able to:

• Critically assess the factors that determine the optimal investment, financing and payout decisions of a firm.
• Compute the cost of capital of a firm under alternative assumptions.
• Use alternative methods for valuing firms to gain important insights into value drivers.
• Discuss the main motives for mergers and acquisitions.
• Identify the reasons why firms raise capital.
• Explain key theoretical models and the assumptions that underpin those models, and reflect critically on the limitations of those models.
• Interpret empirical evidence.
• Solve numerical problems and analyse case-study information.
• Communicate complex ideas effectively.

Indicative reading list

Hiller D, Ross SA, Westerfield RW, Jaffe J & Jordan BD, Corporate Finance, (European edition, McGraw-Hill 2010).
Berk J & DeMarzo P, Corporate Finance, (2nd edition, Pearson 2010).

Subject specific skills

Discuss topical issues about the theory and practice of Corporate Finance.
Construct spreadsheets to value the equity and debt in a firm’s capital structure, and test the robustness of those values to changes in key inputs.
Explain and interpret corporate financial information from the financial press.
Use web-based resources to retrieve, process and interpret corporate financial data.

Transferable skills

Solve structured numerical problems.
Write informed critiques of important topics in Corporate Finance theory.
Analyse case studies and formulate arguments to support a particular solution.