SluitenHelpPrint
Switch to English
Cursus: EC2PCF
EC2PCF
Principles of Corporate Finance
Cursus informatie
CursuscodeEC2PCF
Studiepunten (EC)7,5
Inhoud
This course cannot be cobined with Corporate Finance and Behaviour (ECB2FIN). 

Contents
This course offers a framework to systematically tackle the financial problems of corporations and individuals. It introduces you to the financial issues faced by corporations, like investing in real assets and acquiring the funds to pay for these investments. In addition, it gives you a broad introduction to how financial markets work and how financial assets like bonds and equity are valued by investors. Using financial theory you will learn to analyse and solve the basic problems of corporate finance.
 
Corporate finance studies two broad questions of the corporation: First, in which assets should the corporation invest (capital budgeting decision)? From a wide array of possible investment projects, a corporation needs to select projects that increase shareholders wealth. Naturally, the available projects differ in timing and size of the expected cash flows. You will learn how to compare and select investment projects. Second, how is the corporation going to pay for these assets (financing decision)?  A firm can use internally available funds, or it can issue new equity or debt capital. The overall mix of capital is often referred to as the firm’s capital structure, which is a crucial firm characteristic. The capital used by the firm is provided by investors: you will learn how investors determine the value of equity and bonds, and how to tackle the relationship between risk and returns.
 
Topics to be covered in the course are:
  • Firm performance: financial statements and financial ratios.
  • Time value of money: present value, future value and compound interest. 
  • Valuation of financial assets (stocks and bonds).
  • Capital budgeting and investment decisions.
  • Risk and return in financial markets.
  • Capital Asset Pricing Model (CAPM), cost of capital and capital structure. 
  • Risk management and other selected topics in corporate finance. 
Learning objectives
At the end of the course the student is able to:
  • Analyse a firm's performance based on its financial statements.
  • Compound and discount streams of cash flows.
  • Calculate the net present value (NPV) of an asset. 
  • Value financial assets: stocks, bonds and options.
  • Describe the functioning of financial markets. 
  • Interpret the relation between risk and return.
  • Calculate a project’s cash flows and the cost of capital. 
  • Select investment projects. 
  • Determine the optimal capital structure.
  • Understand several strategies a firm can use to manage risk. 
Format
There will be plenary lectures and review sessions. The main focus of the lectures is on knowledge transfer and creating an understanding for the subject. In the review sessions, assignments and typical exam questions will be worked out together to prepare the student for the weekly quizzes and the final exam. On top of this, the student is also expected to work extensively on the virtual learning platform Connect that accompanies the textbook.

Assessment method
The final course grade will be the weighted average of the student’s best three weekly quiz grades (15% weight) and a final exam (85% weight). 
 
Effort requirements
There will be no particular effort requirement for this course, so following U.S.E. policy, a 4 (not rounded up) means the student is eligible for a full retake and a 5 (not rounded up) means the student can choose between a full retake or a supplementary retake. 

Language of instruction
English.

Students are expected to have knowledge of:
  • Mathematics (ECB1WIS)
  • Financial Accounting (ECB1IBE)
  • Microsoft Excel
Note that especially for students without an economics background this is an intensive and challenging course. To the extent students lack knowledge of Financial Accounting, Mathematics and Excel, students are expected to compensate for this on their own. 
 
SluitenHelpPrint
Switch to English