Course syllabus
Course: Advanced Corporate Finance
Description of Course
The main aim of this Course is to provide a rigorous grounding in the theory and practice
of corporate finance at an advanced level, and a thorough synthesis of the most important
current research in corporate finance, with an emphasis on the applications of the principles.
Both normative and positive aspects of the theory are examined, together with supporting
descriptive and empirical evidence.
Course Objectives:
Upon completion of the Course, you should have:
advanced knowledge and critical understanding of essential components of modern finance
theory and associated current research; explored, understood and appreciated the
complexity and contradictions of the current academic literature and its implications for
professional practice, and be able to identify open questions for their own research;
demonstrated ability to learn and work independently in corporate finance, exercising critical
judgment and discrimination in the resolution of complex problematic situations; used highly
specialized and advanced technical, professional and academic skills in the analysis of relevant
specific problems in corporate finance; Have the opportunity to apply problem solving and
analytical skills to issues in corporate finance in a complex specialized context.
Course Content
Chapter One
Introduction to Financial Theories
1.1. An overview of Finance
1.2. Objectives and Goals of Finance
1.3. Functions of financial management
1.4. Role of corporate finance manager
1.5. Financial Assets/ Instruments and Markets
Chapter Two
Investment Decision and Capital Budgeting
2.1. Introduction to investments and capital budgeting
2.2. Investment appraisal techniques
2.3. Non Discounted cash flow techniques
2.4. Payback period
2.5. Accounting rate of returns
2.6. Discounted cash flow techniques
2.7. Net present Value(NPV)
2.8. Internal Rate of Returns(IRR)
2.9. Comparison of the NPV and IRR Methods
2.10.
Multiple IRRs and Modified Internal Rate of Return (MIRR)
2.11.
Profitability Index(PI)
2.12.
Conclusions on Capital Budgeting Methods and Business Practice
Chapter Three
Valuation of Stock and Bonds
3.1.1.
3.1.2.
3.1.3.
3.1.4.
3.1.5.
3.1.6.
3.1.7.
3.2.1.
3.2.2.
3.2.3.
3.2.4.
3.2.5.
3.2.6.
Legal Rights and Privileges of Common Stockholders
Types of Common Stock
Common Stock Valuation
Constant Growth Stocks and Expected Rate of Return on a Constant
Valuing Stocks That Have a Non constant Growth Rate
Stock Valuation by the Free Cash Flow Approach
Preferred Stock
Bond valuation
Who Issues Bonds?
Key Characteristics of Bonds
Bond Valuation
Bond Yields
Changes in Bond Values over Time
Chapter Four
Risk and Return analysis and Portfolio theory
4.1. Risk Analysis & Management
4.2. Uncertainty and Risk
4.3. Types of Risk
4.4. Measurement of Risk (Standard Deviation and Beta)
4.5. Systematic and Unsystematic Risk (Measurement and Analysis)
4.6. Diversification and Portfolio Risk
4.7. The Security Market Line (SML)
4.8. Markowitz’s portfolio theory
4.9. The Capital Asset Pricing Model (CAPM) and Arbitrage pricing theory (APT)
Chapter Five
Cost of Capital
5.1. The Cost of Equity
5.2. The Cost of Debt
5.3. The cost Preferred Stock
5.4. The Weighted Average Cost of Capital
Chapter Six
Market Efficiency and Efficient Market Hypothesis:
6.1. Classification of financial markets and Market Efficiency
6.2. Forms of efficiency
6.3. Efficient market hypothesis
Chapter Seven
Corporate Valuation And Financial Analysis
7.1. Corporate Value Creation
7.2. What should be the goal of management?
7.3. Accounting profits and economic profits
7.4. Residual income
7.5. Some evidence
7.6. EVA and MVA
7.7. Other measures of value creation
7.8. Corporate Valuation and Ratio Analysis
7.9. Market Value Ratios
7.10. Trend Analysis, Common Size Analysis, and Percentage Change Analysis
7.11.
The Du Pont Equation
7.12.
Comparative Ratio and Bench marking
7.13.
Uses and Limitations of Ratio Analysis