Course 2006-2007 a.y.

Course Objectives

The course explores investing and financing decisions, focusing on their role in the creation of value for shareholders. Corporate applications of financial theories are thoroughly examined from both financial policies and financial management standpoints. The course provides an introduction to the operative functions of the Chief Financial Officer and the Corporate Treasurer.
The program consists of the following five modules: 

• Objectives, functions and instruments of corporate finance
• Instruments for financial analysis and planning
• Market risk and return of securities
• Capital budgeting
• Corporate financial structure and cost of capital

Course Content Summary

• The financial value of time, opportunity cost of capital and the net present value rule
• Reclassification of income statement, balance sheet, financial statement, financial analysis through ratios and financial planning
• Economic return and the value of common stocks
• Investment valuation rules
• Risk, return and the cost of capital
• Portfolio theory and the Capital asset pricing model
• Risk and capital budgeting
• Market efficiency and financing choices
• MM theory, costs of financial distress and pecking order theory
• Making capital structure decisions
• Interaction between investment and financing decisions: cost of capital and value

Detailed Description of Assessment Methods

Attending students
The exam is written. Students may take a 1^st partial exam and then a 2^nd partial exam. To pass the exam the student must obtain at least a mark of 18 in each of the two written exams. In this case the average of the two marks, which will be rounded up, will be registered.

Non-attending students
The exam is written.

Textbooks

• R. BREALEY, S. MYERS, F. ALLEN, Corporate Finance, Mc Graw-Hill, 2006, 8^th ed., (chapters 1-10, 12, 13, 17, 18, 19, 29, 31).