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Corporate Finance (MScF)

  • Teacher(s):   T.Dimopoulos  
  • Course given in: English
  • ECTS Credits: 6 credits
  • Schedule: Autumn Semester 2019-2020, 2.0h. course + 2.0h exercices (weekly average)
  •  sessions
  • site web du cours course website
  • Related programmes:
    Master of Science (MSc) in Finance, Orientation Asset and Risk Management

    Master of Science (MSc) in Finance, Orientation Corporate Finance

    Master of Science (MSc) in Finance : Financial Entrepreneurship and Data Science

 

Objectives

The aim of this course is to provide students with a thorough understanding of how corporate financial decisions are made in the presence of economic uncertainty.

In this course we will study the sources of corporate financing and the evaluation of alternative investment projects. This process will involve understanding principles of capital budgeting, measuring and projecting cash flows and computing the firm’s cost of capital. We will examine how taxation and bankruptcy costs affect corporate financing, and how ultimately those decisions shape the cost of firm financing. We will go through a variety of methods for valuing projects, equities or firms.

We will study how investment and financing decisions are distorted when conflicts of interest emerge between creditors and shareholders, or management and shareholders. We will see why valuable projects may not be undertaken, how debt financing may give rise to value destroying investments and excessive risk taking. Furthermore, we will see why firms may be cut off from financing (credit rationing), and how firms can navigate corporate bankruptcy. Finally, we will examine the decision of firms to pay dividends or to repurchase shares, and we will analyze investors’ trading behavior around such events.

Contents

1. Introduction to Finance

2. Time value of money

    3. Fixed Income Securities

    4. Capital Budgeting I

    5. Capital Budgeting II

    6-8. Risk in investment projects

      9. Valuation I

        10. Valuation II

        11. Bankruptcy and the Trade-off Theory of Capital Structure

        12. Agency costs

        13. Asymmetric Information

        14. Payout Policy

        References

        No single textbook covers the entirety of the topics that we will consider.

        The required textbook for the course is:

        Additional readings will be provided in class or electronically.

        The following textbooks may also be helpful on some of the topics covered:

        • Tirole, Jean (2005): The Theory of Corporate Finance, Princeton University Press,

        ISBN-10: 0691125562.

        • Damodaran, Aswath (2006): Damodaran on Valuation: Security Analysis for Investment and Corporate Finance, Second Edition, Wiley & Sons, ISBN-10: 0471751219.
        • Brealy, Richard, Myers, Stewart and Franklin Allen (2017): Principles of Corporate Finance, 12th Edition, McGraw-Hill Irwin, ISBN10: 1259357465 , ISBN13: 9781259357466.

        Evaluation

        First attempt

        Exam:
        Written 3h00 hours
        Documentation:
        Not allowed
        Calculator:
        Allowed with restrictions
        Evaluation:

        • Final exam format: written, 3 hours, closed book, non-programmable calculators are allowed. Students arriving late will not be granted a time extension and must finish at the same time as the rest of the students.
        • The final grade for the course is:

        Grade=0.2*Project +0.8*Final Exam Grade.

        The Project and the Final Exam are each graded on a 1-6 scale. A grade 0 will be assigned for late submissions/omissions/copying or any other breach of academic integrity.

        Retake exam: Same as first attempt.

        Retake

        Exam:
        Written 3h00 hours
        Documentation:
        Not allowed
        Calculator:
        Allowed with restrictions
        Evaluation:

        same as first attempt



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