Corporate Finance
Code
2253
Academic unit
null
Department
null
Credits
7
Teacher in charge
Rafael Zambrana
Teaching language
English
Objectives
This corporate finance course will give you the capacity to understand the theory and apply, in real-world situations, the techniques that have been developed in corporate finance. It starts by discussing valuation. In particular, it will be discussed the valuation of stocks, bonds, and options. The course then introduces risk and return and develops tools for measuring risk and determining appropriate discount rates. It also considers issues relevant to corporate managers in determining optimal investment and financing policies. It examines the impact of taxes, agency costs, and benefits on debt and payout policy. We will seek a balance between the theoretical paradigms, the empirical findings, and their applicability to the real-world. Emphasis will be on principles and problem-solving. Lectures and exams will concentrate on both quantitative and conceptual foundations.
Prerequisites
N/A
Subject matter
1. Introduction to Corporate Finance, Time Value of Money and Interest Rates.
2. Bond, Stock, and Option Valuation.
3. Portfolio Theory and Capital Asset Pricing Model.
4. Cost of Capital.
5. Capital budgeting without debt.
6. Real Options.
7. Capital Structure.
8. Capital budgeting with debt.
Bibliography
The main textbook: Corporate Finance by Jonathan Berk and Peter DeMarzo, Pearson 3rd edition, Global Edition.
Some complementary material will be posted for download on the class web page.
Resources
All the material will be available on Moodle.
Teaching method
Classes are weekly and last for 3 hours. Classes are devoted to the presentation of the material by the instructor and to the application of the material in the form of exercises.
There will be a group assignment in the form of a company report.
Evaluation method
In terms of the evaluation, there will be a midterm, which will cover the material discussed until one week before. The mid-term will be MANDATORY. The final exam will cover all the material and is also mandatory. In accordance with the schools norms, there is no procedure for grade improvement after passing a course (no re-sit or second-course enrolment).
Total score in the course will consider:
Company report (in groups of 2-4): 20%
Midterm exam (individual): 30%
Final exam (individual): 50%
All three grades will be rounded at .5 (suppose your point average for the mid-term averages out to 16.39 out of 20, then your grade will be a 16.5). The final grade will be averaged using the weights above and rounded at the closest integer (suppose your grade averages out to 16.39, your final grade for the course will then be a 16). None of these rules are up for discussion and neither the teacher nor the TA will answer any such requests.
For each of the three components of the grade there will be a revision session. In this revision session the TA shows the students their corrected exam material and will answer questions about the correction if necessary. If the student thinks his exam was not graded correctly, for any reason, he or she can put in a request for grade revision with the professor by filling in a form. As a disclaimer, beware that a request for exam revision implies that the professor will have a look at your whole exam, not just the question you are suggesting us to revise. Hence, your grade might also go down after the revision.