course-details-portlet

IF420 - Decision Theory and Corporate Finance

About

Examination arrangement

Examination arrangement: Written examination
Grade: Letters

Evaluation form Weighting Duration Examination aids Grade deviation
Written examination 100/100 5 hours D

Course content

Professional content
The purpose of the course is to give the student thorough knowledge of key elements in business economics analysis. The main theme is modeling of rational individual decision-making behavior under uncertainty. The course looks at key decisions in a company such as choice of capital structure, decision on which securities to be issued and distribution policy. Conflicts between shareholders and debtors, incentive pay to managers, securities and new types of securities are discussed. Adverse selection is used to describe companies' adaptation of capital structure and Moral Hazard is used to describe an investor's choice situation by investing in an entrepreneurial business. The course will provide a good foundation for studying advanced literature in business economics. General decision-making in the form of decision-making and preferential arrangements. Axioms for rational decision-making under uncertainty. Preferential arrangement can be represented by expected benefit. Risk aversion, risk premium and security equivalent. Dominance analysis, subjective probabilities, identification of risk preferences. Information Analysis. Bayesian Learning and Value of Information Introduction to Empirical Analysis Investment Analysis and Capital Cost Selection of Capital Structure Which Securities To Issue Hybrid Types of Securities Asymmetric Information Selection Issue Dividend Policy. Conflicts between shareholders and debtors Incentive wages to managers Securities Mergers and acquisitions

Learning outcome

Knowledge:
The student
- Knowing key decisions in a company such as choice of capital structure, decision on which securities to be issued and distribution policy. Knowing key issues and current research in the field
- Knowing different criteria for choosing between investment projects - Gain insight into the theory and analytical methods associated with business investment, financing and allocation decisions.

Skills
The Student
- Can analyze the company's investment, financing and allocation decisions.

General competence
The student
- Can assess the uncertainty and risk of projects and evaluate the form of financing and payment policies in companies.

Learning methods and activities

Lectures, assignments, submissions

Compulsory assignments

  • Termpaper

Further on evaluation

Supporting material allowed on exams: Approved calculator regarding NTNUs support material code B-D "specific basic calculator". Other calculators that are allowed in the course are: Casio FC-100V and Texas Instruments - BAII Plus.

Admission to study programme is required.

Specific conditions

Exam registration requires that class registration is approved in the same semester. Compulsory activities from previous semester may be approved by the department.

Required previous knowledge

None

Course materials

Literature
Selected sections of the books: David Hillier, Mark Grinblatt, Sheridan Titman (2012) Financial Markets and Corporate Strategy: 2nd European Edition. McGraw Hill. Carol Alexander, Wiley (2008): Market Risk Analysis Volume 1: Quantitative Literature
Selected sections of the books: David Hillier, Mark Grinblatt, Sheridan Titman (2012) Financial Markets and Corporate Strategy: 2nd European Edition. McGraw Hill. Carol Alexander, Wiley (2008): Market Risk Analysis Volume 1: Quantitative Methods in Finance In addition, there are various articles and chapters from other books. Recommended support literature: Tirole, Jean (2006) The Theory of Corporate Finance. Princeton NJ, Princeton University Press. Brooks, Chris (2002) Introductory Econometrics for Finance. Cambridge, Cambridge University Press. Subject to changes. Final syllabus is given at the start of the semester.

Learning forms and activities
Lectures, assignments, submissions

Credit reductions

Course code Reduction From To
BA421 7.5 01.08.2008
More on the course

No

Facts

Version: A
Credits:  7.5 SP
Study level: Second degree level

Coursework

Term no.: 1
Teaching semester:  SPRING 2021

Language of instruction: Norwegian

Location: Trondheim

Subject area(s)
  • Economics and Administration
Contact information
Course coordinator:

Department with academic responsibility
NTNU Business School

Phone:

Examination

Examination arrangement: Written examination

Term Status code Evaluation form Weighting Examination aids Date Time Digital exam Room *
Spring ORD Written examination 100/100 D INSPERA
Room Building Number of candidates
  • * The location (room) for a written examination is published 3 days before examination date. If more than one room is listed, you will find your room at Studentweb.
Examination

For more information regarding registration for examination and examination procedures, see "Innsida - Exams"

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