Description:

Structured presentation of the theory and practice of how corporations make financial decisions

Learning Targets:

Students

• get familiar with modern concepts and methods of analyzing optimal financial decision making in corporations,
• can evaluate the empirical validity of leading models and apply them to solve real-world problems in corporate financial decision making,
• are able to understand and explain discrepancies between the theory and the practice of corporate finance,
• can evaluate scientific studies accurately, understand the methodology used in leading papers of the field, can interpret estimation results correctly and analyze them critically,
• can communicate and debate topics of the lecture in a structured and professional way.

Outline:

• Statement Analysis
• Investments Capital Budgeting, and DCF Valuation
• Valuation of Bonds and Stocks
• Risk and Return
• Capital Market Equilibrium and Cost of Capital
• Project Analysis and Real Options
• Capital Structure and Payout Policy
• Behavioral Corporate Finance

Literature:

• Brealey/ Myers / Allen: “Principles of Corporate Finance”, McGraw-Hill, New York.
• Ross/Westerfield/Jaffe: “Corporate Finance”, McGraw-Hill, New York.
• Berk/DeMarzo: “Corporate Finance”, Pearson Prentice Hall, Boston.

Methods of Assessment:

The module-related examination is performed by a written test (usually 60-90 minutes).

Formalities:

Students are assumed to have undergraduate level knowledge of finance and economics. Some basic knowledge of statistics/econometrics is helpful to understand empirical research conducted in the research papers. A sufficient level of spoken and written English language skills is necessary.