Course content

Valuation, risk and return, capital budgeting decisions, market efficiency, dividend policy, capital structure, equity financing, debt financing, and options.

Learning outcome

Aims

This course provides a theoretical framework used to address issues in project appraisal and financing, payout policy, capital structure, equity offerings and risk management. It provides students with the tools required for further studies in corporate financial management and investments.

At the end of this course students are expected to be able to:

Knowledge

• analyze the governance decisions of a company
• value projects using key capital budgeting techniques
• appreciate approaches available to raise funds to finance projects and investments
• understand the theories of risk and return
• explain the relevance of the payout policy and its role in valuation of securities
• discuss the trade-off firms face between tax advantages and various costs of debt
• discuss different capital structure theories
• calculate and apply different costs of capital in valuation
• analyze options and their valuation methodologies
• appreciate options as a tool to manage risk

Skills

• use appropriate valuation method(s) depending on the context of the corporate decision
• analyze securities and investment projects
• apply options for risk management purposes

General competence

Students are expected to appreciate the consequences of various investment and financing decisions made by a firm.

Learning methods and activities

Videos, lectures and group studies

Compulsory assignments

• One written assignment

Specific conditions

Required previous knowledge

BØA2200 (for students on a 3-year Bachelor programme in Business Administration at NTNU Business School), or similar prior knowledge (for students on an exchange programme)

Course materials

Reading list will be made available at the start of the course.

Credit reductions