Learning objectives
Upon successful completion of the module, students will be expected to have developed the following learning outcomes and competences.
Knowledge and understanding:
- understand, describe and explain in a formal way the interactions between investments and the risk-reducing properties of portfolios;
- show an awareness of the empirical evidence relating to the CAPM;
- have a firm grasp of the variety of methods of raising finance by selling shares and understand a number of the technical issues involved;
- describe, compare and contrast the different short-term and long-term debt instruments;
- describe the key drivers of value and the actions to increasing value, pointing out advantages and problems in practical use of different value metrics;
- explain the relevance of some important, but often non-quantifiable, influences on the optimal gearing level question;
- describe the influence of particular dividend policies;
- explain the nature of options and the distinction between different kinds of options, and demonstrate their application in a wide variety of areas.
Application of knowledge and understanding:
- identify efficient portfolios and apply utility theory to obtain optimum portfolios;
- measuring beta;
- measuring the market risk of bonds of different maturities;
- map business activities in terms of industry attractiveness, competitive advantage within the industry and life-cycle stage and make capital allocation choices;
- calculate the weighted average cost of capital (WACC) for a company;
- measuring capital and income gearing, together with interest cover;
- Outline a dividend policy for a typical fast-growth and high-investment firm;
- compute the intrinsic and time value on various options.
Making judgement
- developing a “critical thinking” approach to financial models in order to delimit their applicability domain;
- ability to consolidate a judgmental autonomy in order to improve awareness of advantages and drawback of different sourcing and investment techniques.
Communication:
- ability to communicate information, ideas, problems and solutions in the field of financial analysis in both written and oral form.
Learning skills:
-developing the learning skills needed to undertake subsequent advanced training in corporate valuation and investment banking.
- developing specific learning skills through a "Problem-Solving Learning" approach in problem solving and discussion of integrative cases.
Prerequisites
No compulsory preparatory course, although basic financial statement prior knowledge is advisable
Course unit content
The module is designed to provide students with a detailed introduction to the subjects of corporate financial management. The main subjects cover such areas as raising finance (both equity and debt) and knowledge of financial markets, creating and measuring shareholder value and managing risk.
Full programme
Part 1: Risk and return
- Portfolio theory
- The Capital Asset Pricing Model and multi-factor models
Part 2: Sources of finance
- Stock markets
- Equity capital
- Long-term debt finance
- Short-term and medium-term finance
Part 3: Value
- Value-based management
- Capital structure
- Dividend policy
Part 4: Risk management
- Derivatives
- Managing exchange-rate risk
Bibliography
Teaching notes provided by the instructor.
Required textbook: none.
Suggested textbook:
- Corporate Finance: Theory and Practice, Wiley.
- Allen, Brealey, Myers, Principles of Corporate Finance, McGraw-Hill.
Teaching methods
6 ECTS are allocated to the module; the total workload for the student is therefore equivalent to 150 hours divided between:
a) the frequency of frontal lessons on theoretical and applicative aspects (in class),
(b) individual study and preparation for examination (individual study).
50% of lessons in the classroom are theoretical (24 hours) and 50% are related to the resolution of exercises / problems performed by the instructor (24 hours).
Assessment methods and criteria
Assessment is based, for both attending and non-attending students, on:
a) a written exam (30 marks carrying 50% on the global mark) on theory and simple numerical exercises. Possible questions formats are “short essay”, “multiple choice” and “short exercise” types. Marks carried by each single question will be printed out on test papers. A minimum score of 14 marks is a pass on to subsequent oral exam.
b) an oral exam (30 marks carrying 50% on the global mark) for application and practical skills assessment.
The two tests must necessarily be taken in the same exam session. Global mark (30-point scale) is the weighted average of both exams; passing grade is 18 out of 30 or above. “Cum laude," is added to the maximum grade for outstanding candidates with maximum marks in both written and oral exams.
Other information
Active participation and discussion of contents is encouraged. Therefore, the study of specific bibliographic references in advance of each class is strongly recommended. Lesson slides can be downloaded from the Elly platform, along with the exercise texts.
2030 agenda goals for sustainable development
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