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Unit information: Corporate Finance in 2016/17

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Unit name Corporate Finance
Unit code EFIMM0017
Credit points 15
Level of study M/7
Teaching block(s) Teaching Block 2 (weeks 13 - 24)
Unit director Dr. Kim
Open unit status Not open
Pre-requisites

Finance and Accounting (ECONM1007)

Co-requisites

None

School/department School of Economics, Finance and Management
Faculty Faculty of Social Sciences and Law

Description

This unit aims to provide students with a well-rounded picture of firms’ investment decisions and financing decisions. Building on the basic tools introduced in Finance and Accounting (ECONM1007), the unit explores various topics in corporate finance. They include capital budgeting problems, the effect of capital market imperfections on the firms’ investment and financing decisions, the use of real options in project evaluation, mergers and acquisitions, and security offerings. The unit will be delivered via a mix of lectures, tutorials, and exercise lectures, as well as case studies and additional readings where appropriate.

Intended learning outcomes

On successful completion of the unit, students should be able to discuss main questions of corporate finance, understand underlying economic theories, and apply numerical techniques to analyse problems. Moreover, they should be able to:

Understand the key aspects of project evaluation and have a good command of valuation methods including real-option approach.

Discuss market imperfections and their implications for firms’ investment and financing decisions drawing on appropriate theoretical frameworks and empirical evidence.

Discuss important issues and institutional details surrounding corporate activities, such as mergers and acquisitions and security offerings, and analyze related problems.

Teaching details

20 contact hours split between lectures, exercise lectures, tutorials, and clinics (typically 14 hours lectures, 6 hours split between exercise lectures and tutorials).

Assessment Details

The unit is assessed via a three-hour closed book exam in May/June (100%). The exam will contain a mix of essay and numerical questions. Numerical questions will assess students’ ability to analyse core finance problems, while essay-type questions will assess students’ understanding of underlying theories and institutional knowledge, as well as their critical reasoning skills.

During the term, the lecturer will distribute Problem Sets. Students will be asked to discuss problems and demonstrate problem-solving steps in class (tutorials/exercise lectures). In addition, students are required to submit in groups their case analysis reports during the term. In this assignment, students will demonstrate their ability to identify the relevant issues, apply the concepts and frameworks learned, and report their analysis in a clear and concise fashion. Selected groups will be asked to present their analysis in class.

Reading and References

Hillier, Grinblatt and Titman, Financial Markets and Corporate Strategy, McGraw-Hill

Berk and DeMarzo, Corporate Finance, Prentice-Hall

Ross, Westerfield, and Jaffe, Corporate Finance, McGraw-Hill

Case study materials (to be distributed)

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