Academic skills
This course focuses on the following academic skills:
Analytical skills:
• Being able to solve problems (identifying the problem, devising a path towards the solution, follow this path,
verify the outcome) for more complex assignments.
• Being able to identify, interpret and critically evaluate the main line of reasoning, for more complex problems.
• Being able to evaluate evidence in text and presentations for more complex problems.
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This course focuses on the fundamental financial theories and applications that describe how corporate financial managers value investments, make financing decisions, and manage financial risks. The course covers several major aspects of financial analysis and decision making seen in modern corporations, including the valuation of projects and securities, capital structure choice, working capital management, and the management of international risks. While many of the theories and tools in financial management assume well-functioning capital markets with rational economic agents, the course also covers alternative perspectives based on key insights from the field of Behavioral Finance.
Required: cannot be combined with EC3VF, EC2PCF and Corporate Finance, given at LUISS (EU-LUISS/ECBFIN).
Topics:
- Financial statements, time value of money
- Corporate governance, DCF (discounted cashflow) and loans
- Bonds and equity
- Capital budgeting
- Market efficiency, risk, CAPM model and SML
- Cost of capital and capital structure
- Risk management and options
- Behavioural Finance
Format
There will be plenary lectures and plenary tutorials.
The main focus of the lectures is on knowledge transfer and creating an understanding for the subject.
In plenary tutorials, assignments and typical exam questions will be worked out together so that you are well prepared for the upcoming weekly quiz and the final exam. The main focus of the tutorials is to get you to work, to work through exercises together, and to have more time for your questions.
Assessment method
The final course grade will be the weighted average of your weekly quiz grades (together 15% weight) and a final exam (85% weight). There will be seven weekly quizzes.
Quizzes
The weekly quizzes will be online assignments on 'Connect'. This is an online learning and testing environment of the publisher of the textbook, McGraw-Hill. To access Connect you need the unique login code from your textbook. It is your responsibility to have access to the online environment on which the weekly quizzes will be offered and that you have a reliable and working internet connection for the weekly quiz.
The composition of your Connect grade looks as follows:
0 Connect quizzes above 50%: Connect grade = 1
1 Connect quiz above 50%: Connect grade = 3
2 Connect quizzes above 50%: Connect grade = 5
3 Connect quizzes above 50%: Connect grade = 7
4 or more Connect quizzes above 50%: Connect grade = 9
Furthermore, you can earn an additional point for your Connect grade by participating in the tutorials.
Final exam
The final exam is a closed-book exam which consists of approximately 40 multiple choice questions and possibly a number of open end questions. The final exam will cover all topics of the course, including the topics of the weekly quizzes. At this . exam . you are not allowed to bring any books or notes. .. Only non-programmable calculators are allowed (see the students website for permitted models). A sheet with the most important formulas will also be provided (and posted in advance of the exam on Blackboard).
Effort requirements
The effort requirement for this course is attendance and active participation in the tutorials. To be eligible for the retake you need to attend at least 5 out of 7 tutorials for which you’re demonstrably prepared and in that case you will receive 1 additional Connect grade point. At the beginning of the tutorial you need to register with your name, student number and your student e-mail via the Mentimeter request at the start of the tutorial.
You either receive 0 or 1 Connect grade point in addition, by participating in the tutorials.
Repeaters
Repeaters will have the same curriculum as a regular student, this includes the weekly Connect quizzes.
Note that we only teach from the indicated textbook, we don't take any responsibility in translating the course material to previously used textbooks.
Extra Notes:
1) You will have to attend at least 1 connect quiz in order to get an end-grade! Otherwise you will end up with a ND (= no participation)
2) The maximum number of Connect grade points to be realized is 9 + 1 = 10, representing 15% of your final grade.
3) At the retake exam for ECB2FIN the results of quizzes and/or effort requirement are NO LONGER applicable. The retake exam is in that case the final and only grade taken into consideration.
Course materials
Please purchase the following course textbook before the first lecture:
Brealey, R., S. Myers, F. Allen, Principles of Corporate Finance 13th edition. McGraw Hill. ISBN: 9780077189990.
Make sure to buy the International edition of the textbook and not the American one (check the ISBN number to be sure). And make sure to buy the book at ECU´92 so that the Connect-code is included.
Note:
This course is a follow-up to Introduction to Finance and Accounting (ECB1IFA). Students are supposed to be familiar with chapters 1-9 of Brealey, Myers and Allen (2019) Principles of Corporate Finance, 13th edition: SBN 9781447021827, or have equivalent knowledge.
If students lack this knowledge they must study aforementioned chapters prior to the course. This may apply in particular to premaster, minor and other external students who did not take the first year of USE’s bachelor in Economics and Business Economics.
In case online access is required for this course and you are not in the position to buy the access code, you are advised to contact the course coordinator for an alternative solution. Please note that access codes are not re-usable meaning that codes from second hand books do not work, as well as access codes from books with a different ISBN number. Separate or spare codes are usually not available.
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