Corporate Finance Course Notes
COURSE OBJECTIVE
The course is aimed at to develop in-depth understanding of Finance function of a corporation and build capacity to apply theory in real world situations. The course will present the ‘Big Picture’ of Corporate Finance so that students understand how things fit together. After successfully completing the course, students should be able to take optimal decisions in a corporate setting, when working as professionals in the field.
COURSE OUTLINE
Introduction to Corporate Finance:
Financial Management; Corporate Finance; Corporate Finance vs. Financial Management; Differences between ‘Finance’ and ‘Accounting’; Investment, Financing, and Dividend decisions
Role of Financial Management:
Goals of a Firm; Profit Maximization Approach vs. Shareholders' Wealth Maximization Approach; Time Value of Money and Uncertainty; Agency Problem; Social Responsibility
Business Environment, Taxes, and Financial Environment:
Forms of Business Organizations; Financial Instruments; Money Market and Capital Market Instruments; Financial Intermediaries; Financial Risk and Return
Concepts in Valuation / Time Value of Money:
Present Value vs. Future Value; Simple Interest vs. Compound Interest; Annuities vs. Simple Compounding and Discounting; Future Value of an Ordinary Annuity and Annuity Due
Concepts in Valuation: (Continued)
Present value of an ordinary annuity and annuity due; Amortization and perpetuity; Concept of nominal rate of interest and effective rate of interest; Problem solving
Valuation of Long-term Securities:
Bonds; types of bonds; characteristics of bonds; Zero coupon bond vs. non-zero coupon bond; Perpetual bond; Perpetuity vs. Perpetual bonds
Valuation of Long-term Securities: (Continued)
Preferred stock; Features of Preferred Stock; Valuation of Preferred Stock; Common Stock; Features of Common Stock; Dividend Discount Models; No-growth Model; Continuous (constant) Growth Model
Valuation of Long-term Securities: (Continued)
The course is aimed at to develop in-depth understanding of Finance function of a corporation and build capacity to apply theory in real world situations. The course will present the ‘Big Picture’ of Corporate Finance so that students understand how things fit together. After successfully completing the course, students should be able to take optimal decisions in a corporate setting, when working as professionals in the field.
COURSE OUTLINE
Introduction to Corporate Finance:
Financial Management; Corporate Finance; Corporate Finance vs. Financial Management; Differences between ‘Finance’ and ‘Accounting’; Investment, Financing, and Dividend decisions
Role of Financial Management:
Goals of a Firm; Profit Maximization Approach vs. Shareholders' Wealth Maximization Approach; Time Value of Money and Uncertainty; Agency Problem; Social Responsibility
Business Environment, Taxes, and Financial Environment:
Forms of Business Organizations; Financial Instruments; Money Market and Capital Market Instruments; Financial Intermediaries; Financial Risk and Return
Concepts in Valuation / Time Value of Money:
Present Value vs. Future Value; Simple Interest vs. Compound Interest; Annuities vs. Simple Compounding and Discounting; Future Value of an Ordinary Annuity and Annuity Due
Concepts in Valuation: (Continued)
Present value of an ordinary annuity and annuity due; Amortization and perpetuity; Concept of nominal rate of interest and effective rate of interest; Problem solving
Valuation of Long-term Securities:
Bonds; types of bonds; characteristics of bonds; Zero coupon bond vs. non-zero coupon bond; Perpetual bond; Perpetuity vs. Perpetual bonds
Valuation of Long-term Securities: (Continued)
Preferred stock; Features of Preferred Stock; Valuation of Preferred Stock; Common Stock; Features of Common Stock; Dividend Discount Models; No-growth Model; Continuous (constant) Growth Model
Valuation of Long-term Securities: (Continued)