|Kod Erasmus / ISCED:||
|Nazwa przedmiotu:||Corporate Finance|
|Jednostka:||Wydział Nauk Ekonomicznych|
Przedmioty obowiązkowe dla I roku Quantitative Finance
|Punkty ECTS i inne:||
Finance I, Finance II, Accounting
Attendants to this course will get acquainted with theory and practice of financial management in a modern corporation. They will learn where a company can get financing and which financial instruments it should use. They will know instruments that are helpful in making key financial decisions on strategic and operational level. This course will be held as a lecture with classes. It is expected that students have intermediate knowledge in finance and accounting and some mathematical background. Credit will be given after three written exams - one from the lecture and two from classes.
To fully participate in this lecture basic knowledge in finance is necessary. Mathematical analysis and some accounting intuitions will also be helpful.
I recommend to read four chapters of BMA texbook: 2 How to Calculate present Values
3 Valuing Bonds 4 The Value of Common Stocks
7 Introduction to Risk and Return.
1. Goals and governance of the firm
- basic principles of functioning of a listed company (board, management, shareowners,
- role of financial manager
- incentive and agency problems
- different conflicts of interest and ways of managing them
2. Investment decisions (2)
- popular investment criteria (NPV, IRR, MIRR and other), their advantages, disadvantages
- NPV rule in different applications
- practical problems in capital budgeting
- risk in capital budgeting and methods of its evaluation
3. Risk and cost of equty capital (4)
- Choosing a risk model
- Risk-free rate
- General risk premium.
- Country risk premium.
- Estimating betas.
- Estimating lambdas.
4. Overview of corporate financing. Equity and debt as a source of capital
- equity issuance step by step procedure
- underwriting, private placement, IPOs
- capital dilution and privileged subscription
- bonds issuance step by step
- bank credit as an alternative source of long term financing
5. Lessons of market efficiency
- Efficient Market: theory and evidence
- Six lessons for financial managers
6. Dividend policy
- types of dividends
- reasons to pay dividends
- taxation and dividends
- optimal dividend model
7. Optimal capital structure (2)
- traditional approach
- Modigliani-Miller theorems
- tradeoff theory
- pecking order theory
8. Calculating cost of capital of the firm
- value of corporate debt
- foreign capital cost and yield spread
- financing and valuation - APV
- reasons to merge and types of mergers
- cost and gains of a merger
- mergers financing and tactics
- corporate restructuring
10. Working capital management (classes)
- cash management
- inventory management
- managing liquidity of assets and liabilities
- trade credit and discounts
11. Leasing (optional)
- sensible and dubious reasons for leasing
- financial and operating leases
- when do financial leases pay
Exam is based mostly on the content of the lecture and BMA textbook. Some knowledge from finance and accounting, that will not be thought during the course, is also important on the exam. This knowledge can be obtained from the following chapters of BMA book (or other courses):
2 How to Calculate present Values
3 Valuing Bonds
4 The Value of Common Stocks
7 Introduction to Risk and Return
8 Portfolio Theory and the Capital Asset Pricing Model
20 Understanding Options
21 Valuing Options
28 Financial Analysis
For revision and further reading, following positions may be helpful:
Franklin Allen, Richard Brealey, Stewart Myers, Principles of Corporate Finance, McGraw-Hill 2011. [BMA]
Aswath Damodaran, Investment Valuation 3rd Edition 2011. [D]
CFA Program Curriculum vol. 4, Corporate Finance and Portfolio Management, 2010.[CFA]
Below there is a list of obligatory chapters of BMA textbook in the order of appearance on the course. In brackets chapter’s number of the tenth and seventh edition (it is the same for first 22 chapters). PX means that the chapter is helpful when solving problem set X.
I Valuation (7 lectures).
Goal and Governance of the Firm 
Why Net Present Value Leads to Better Investment Decisions than Other Criteria  P1
Making Investment Decisions with Net Present Value Rule  P2
Risk and the Cost of Capital  P3
Supplementary recommended chapters on cost of capital from Damodaran’s Valuation (3rd Edition):
Chapter 4 The Basics of Risk
Chapter 7 Riskless Rates and Risk Premiums
Chapter 8 Estimating Risk Parameters and Costs of Financing
II Financing (5 lectures).
An Overview of Corporate Financing  P4
How Corporations Issue Securities  P4
Corporate Financing and the Six Lessons of Market Efficiency 
Payout Policy  P5
Does Debt Policy Matter  P6
How Much Should a Corporation Borrow?  P6, P7
III Financing and Valuation (2 lectures).
Credit Risk and the Value of Corporate Debt [23/24] P7
Financing and Valuation  P6
Supplementary recommended chapter on APV from Damodaran’s Valuation (3rd Edition):
Chapter  Firm Valuation: Cost of Capital and Adjusted Present Value Approaches
IV Other topics in corporate finance (1 lecture).
Working Capital Management [30/30,31,32] P8 that will be dealt during classes only
Corporate Restructuring [32/34] especially that part concerning bankruptcy.
Mergers [31/33] P9
|Efekty uczenia się:||
After finishing this course student should:
- know sources of capital and methods of its raising;
- be able to calculate cost of capital;
- be able to evaluate investment projects
- understand conflicts of interest and agency problems in a listed company;
- know in what circumstances a company should merge, pay dividend or repay its debt;
- be acquainted with problems concerning working capital management.
KW01, KW02, KU01, KU02
|Metody i kryteria oceniania:||
To get credit for this course student has to pass both: classes and lecture. During classes there are two written exams. The first exam (Class Exam part I - in April) is based on the first three (or four) problem sets solved during lab sessions. The second exam (Class Exam part II - in June) is based on the remaining problem sets. Class exams check problem solving skills and contain no purely theorethical questions. The latter form the main content of the Final Exam, that takes place in the Summer Exam Session and is based on the lecture and BMA textbook. Students must get credit from classes to take the Final Exam. That means a student must get at least 50 percent of total number of points that are possible to earn during both parts of the Class Exam. The Retake Class Exam will be held in September (both parts during one day with a break) during Summer Retake Exam Session before the Retake Final Exam. For each student there are no more than two attempts to take each exam. Failing to breach the 50% mark from the Class Exam results in loosing one attempt to take the Final Exam. The only opportunity to do it would be in September after passing the Class Exam. There will be no third terms for Class nor Final Exam except for the people who are ill and have an appropriate document written by a doctor.
Zajęcia w cyklu "Semestr letni 2022/23" (w trakcie)
|Okres:||2023-02-20 - 2023-06-18||
zobacz plan zajęć
Ćwiczenia, 15 godzin
Wykład, 30 godzin
|Prowadzący grup:||Kamil Rusak|
|Lista studentów:||(nie masz dostępu)|
Ćwiczenia - Zaliczenie na ocenę
Wykład - Egzamin
Właścicielem praw autorskich jest Uniwersytet Warszawski, Wydział Nauk Ekonomicznych.