Postgraduate Course: Corporate Finance (CMSE11342)
Course Outline
| School | Business School |
College | College of Humanities and Social Science |
| Credit level (Normal year taken) | SCQF Level 11 (Postgraduate) |
Availability | Not available to visiting students |
| SCQF Credits | 15 |
ECTS Credits | 7.5 |
| Summary | This course provides an introduction to the core concepts and skills in corporate finance. It considers the main financial decision facing a company, reviews current academic thinking on how these decisions are made and introduces analytical tools that can assist in financial decision-making. |
| Course description |
The course objectives are to equip students with a clear understanding of both basic and advanced corporate finance issues. The course will teach students to apply their understanding of theories and corporate finance models in real world situations. The objective is to develop the theoretical and practical tools for students who are embarking on a career in finance or who wish to move to a senior management career from a finance specialisation.
Syllabus:
1. Companies and projects: discounted cash flow
2. Discounted cash flow continued, and other applications of interest rates
3. Cost of capital
4. Cost of capital continued, and examples of project appraisal
5. Estimating the cost of capital
6. Corporate investment decisions in practice
7. Managing risk: products and techniques
8. Managing risk continued, and real options
9. Real options continued
10. Financing decisions, and corporate governance
Student Learning Experience
To enhance the learning process, the Course Organiser will arrange a speaker from the finance industry, who will provide the students with a practitioners perspective and illuminate the applicability of the topics covered in the course.
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Entry Requirements (not applicable to Visiting Students)
| Pre-requisites |
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Co-requisites | |
| Prohibited Combinations | |
Other requirements | For Business School PG students only, or by special permission of the School. Please contact the course secretary. |
Course Delivery Information
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| Academic year 2017/18, Not available to visiting students (SS1)
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Quota: None |
| Course Start |
Semester 1 |
Timetable |
Timetable |
| Learning and Teaching activities (Further Info) |
Total Hours:
150
(
Lecture Hours 20,
Seminar/Tutorial Hours 2,
Summative Assessment Hours 3,
Programme Level Learning and Teaching Hours 3,
Directed Learning and Independent Learning Hours
122 )
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| Assessment (Further Info) |
Written Exam
75 %,
Coursework
0 %,
Practical Exam
25 %
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| Additional Information (Assessment) |
Mid-Term Exam 25%
Final Exam 75% |
| Feedback |
General feedback on overall exam performance will be provided in January. |
| Exam Information |
| Exam Diet |
Paper Name |
Hours & Minutes |
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| Main Exam Diet S1 (December) | Corporate Finance (CMSE11342) | 2:00 | |
Learning Outcomes
On completion of this course, the student will be able to:
- Understand and apply discounted cash-flow analysis, with critical understanding of how to allow for uncertainty.
- Understand and critically discuss the concept of the weighted average cost of capital and the effect of gearing on the WACC.
- Critically evaluate the main theories to explain a company's gearing and dividend policies.
- Critically discuss how a company can use the main techniques and instruments available to manage currency and interest rate risk.
- Critically evaluate the main issues in managing debt and in managing working capital.
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Reading List
The main text is:
- Brealey, R.A., Myers, S.C & Allen, F., Principles of Corporate Finance, McGraw-Hill
Other good corporate finance texts (which will not be used) include:
- Hillier, D. et al., (2014) Corporate Finance, 2nd European Edition, New York: McGraw-Hill Education
- Damodaran, A. (2015) Applied Corporate Finance, 5th Edition, New York, John Wiley & Sons Ltd.
- Berk, J. & DeMarzo, P., Corporate Finance, Pearsons
- Megginson, W.L., Smart, S.B & Gitman, L.J., Corporate Finance, Thomson South-Western |
Additional Information
| Graduate Attributes and Skills |
Knowledge and Understanding:
After completing this course, students should be able to:
- Know how to conduct a discounted cash-flow analysis, including how to allow for uncertainty;
- Understand the concept of the weighted average cost of capital and the effect of gearing on the WACC;
- Be familiar with the main theories to explain a company's gearing and dividend policies;
- Understand how a company can use the main techniques and instruments available to manage currency and interest rate risk;
- Be familiar with the main issues in managing debt and in managing working capital;
- Have a knowledge of the issues that arise in managing a multinational company.
Cognitive Skills:
After completing this course, students should be able to:
- Solve quantitative problems using time-lines;
- Build and use payoff profiles in the analysis of exposure to risk
- Design spreadsheets for solving financial problems;
- Comprehend financial texts and extract meaningful information from them for financial decision making;
- Express clearly, verbally and in writing, relationships between financial variables, sensitivity of results to different factors, formulate logical recommendations.
Subject Specific Skills:
After completing this course, students should be able to:
- Calculate the cash flows a firm generates from its financial statements;
- Calculate NPV and construct an NPV profile (the graphical relationship between NPV and the discount rate);
- Analyse a potential investment only based on its NPV profile;
- Collect the necessary input data and calculate the weighted average cost of capital of a company;
- Generate scenarios and perform sensitivity analysis in the context of NPV and WACC calculations;
- Calculate the cost of hedging for basic currency and interest rate risk management instruments. |
| Keywords | Not entered |
Contacts
| Course organiser | Prof Seth Armitage
Tel:
Email: Seth.Armitage@ed.ac.uk |
Course secretary | Mr Jonathan Macbride
Tel: (0131 6)51 3028
Email: Jonathan.MacBride@ed.ac.uk |
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