Finanças
Code
1203-465
Academic unit
null
Department
null
Credits
7,5
Teacher in charge
Igor Cunha
Teaching language
English
Objectives
The main objective of this course is to present the main concepts and tools of the modern theory of Finance that are required to analyse corporate financial decisions. The approach used in the course combines the presentation of the theory with introductory applications of the concepts. By the end of the course, students are expected to be familiar with fundamental concepts and to be able to use them in problems.
Prerequisites
Principles of Management
Financial Accounting
Subject matter
1. Introduction to Corporate Finance
What is corporate finance
The role of financial markets
2. Value and capital budgeting
Time value of money
Present value and future value
Compounding periods and effective annual interest rate
Perpetuities and annuities
Bond valuation
Bond markets
Bond valuation and yield to maturity
Term structures of interest rates
Common stock valuation
Dividend growth model
Estimates of parameters
Capital budgeting
Operating cash flow, working capital and capital expenditures
Net Present Value
Dealing with inflation
Alternative criteria: Internal Rate of Return and Payback
Mutually exclusive projects
Projects with unequal lives
Sensitivity and break-even analysis
3. Risk and return
Portfolio theory
Expected return, variance and covariance
Return and risk of portfolios
Diversification, systematic risk and idiosyncratic risk
Efficient frontier and tangency portfolio
Capital asset pricing model (CAPM)
Capital market line
Beta
Security market line
4. Capital structure and payout policy
Corporate financing decisions
Efficient capital markets
Long-term financing: equity and debt
Issuing securities in financial markets
Capital structure
Modigliani and Miller without taxes
Modigliani and Miller with taxes
Limits to the use of debt
Bankruptcy
Agency costs, asymmetries of information, pecking order theory
Valuation and capital budgeting with debt
Adjusted present value (APV)
Weighted average cost of capital (WACC)
Flow to equity (FTE)
Payout policy
Dividends irrelevance
Stock repurchases
Bibliography
Hillier, Ross, Westerfield, Jaffe, and Jordan, Corporate Finance, European Edition, McGraw-Hill, 2010.
Teaching method
null
Evaluation method
Quizzes will be assigned through Moodle. Students will also be required to analyse and solve a case in groups with five members. Mid-term and final exam are closed book with exception of a double side A4 sheet. Passing grades in the course require a minimum grade of 9.5 in the final exam. The final grade is calculated using the following weights:
Quizzes: 10%
Case analysis: 20%
Mid-term: 20%
Final exam: 50%