75363 - Corporate Finance

Learning outcomes

The goal of this course is to introduce students to the overview of corporate financing, principles of valuation and capital budgeting (criteria for investment decision and cash flow estimation), optimal capital structure and the cost of capital.

Course contents

The course aims to provide students with the basic theoretical, technical and scientific background to work as a professional in the finance division of a company or in an investment bank. In this sense, the course will allow students to integrate the overall skills acquired in the three-year course of study through the understanding of the models of corporate finance, the ability to propose solutions to the financial problems of the company, the ability to apply methodologies, criteria and techniques developed in the discipline to real business situations that require the taking of decisions proper to finance. The course therefore completes the technical preparation of the bachelor's degree by providing knowledge of the fundamentals of corporate finance.

More specifically, the course aims to provide students with the technical and conceptual tools to understand: the functioning of the valuation of corporate investment decisions; the principles of corporate working capital management; the statistical tools for measuring the return and risk of shares; the fundamentals of the theory of portfolio choices; the functioning of the Capital Asset Pricing Model (CAPM); the theory of financial structure choices of companies and its direct implications; the principles for determining the cost of capital; the fundamentals for the valuation of shares and for the valuation of companies; the mechanisms for distributing the value created by a company to its shareholders; the process of listing a company's shares on the stock exchange (initial public offering, IPO); the most innovative alternatives to the IPO, i.e. the use of SPACs; the fundamentals of pricing financial options on shares.

At the end of the course the student will be able to: - understand and use the theories and applied knowledge of modern corporate finance; - analyze the financial management of a company; - evaluate financing, investment and financial structure decisions in order to optimize corporate management.

 

Program

MODULE 1

- Corporate finance and business objectives

- Financial analysis and planning

- Stock valuation

- Investment decisions using the net present value method and other investment evaluation methods (capital budgeting techniques)

- Risk and return

- Portfolio Theory and Capital Asset Pricing Model

MODULE 2

- The financial structure choices of firms

- Estimating the cost of capital

- Company valuation

- The process of listing a company's shares on the stock exchange (initial public offering, IPO)

- The SPACs

- Value distribution mechanisms: dividend policy and share buybacks

- The techniques for pricing financial options on stocks

 

Readings/Bibliography

Jonathan Berk - Peter DeMarzo. Corporate Finance. Global Edition (4^th edition, 2016). Pearson

Teaching methods

Lectures, exercises (also using Microsoft Excel)

Assessment methods

Each of the two modules ends with an exam. The exams will be conducted by the students in the classroom using the EOL platform. Each exam (at the end of each of the two modules) will consist of 11 multiple-choice questions. Each examination will last 1 hour and 15 minutes. The questions will require the resolution of exercises. A student who fails one of the two examinations will subsequently have to sit a full exam. The use of financial calculators is permitted.

Grades will indicate the following levels of preparation.

● < 18: insufficient

● 18-23: sufficient

● 24-27: good

● 28-30: excellent

● 30 cum laude: excellent

Registration on Almaesami is required for taking the exam.

Teaching tools

Instructor's slides, Excel files (templates), exercises (with solutions). Teaching materials will be uploaded on Virtuale (virtuale.unibo.it).

Office hours

See the website of Francesco Baldi

See the website of Antonio Carlo Francesco Della Bina