Course - Decision Theory and Corporate Finance - IF420
IF420 - Decision Theory and Corporate Finance
Examination arrangement: Home exam
|Evaluation||Weighting||Duration||Grade deviation||Examination aids|
|Home exam||100/100||5 hours|
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
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
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.
Compulsory activities from previous semester may be approved by the department.
Required previous knowledge
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
Credits: 7.5 SP
Study level: Second degree level
Term no.: 1
Teaching semester: SPRING 2022
Language of instruction: Norwegian
- Economics and Administration
Examination arrangement: Home exam
- Term Status code Evaluation Weighting Examination aids Date Time Examination system Room *
Home exam (1)
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.
- 1) Merk at eksamensform er endret som et smittevernstiltak i den pågående koronasituasjonen.
For more information regarding registration for examination and examination procedures, see "Innsida - Exams"