Course content

The course discusses elements from the theory of finance and applies them to the analysis of operational and financial decision making problems. Topics include portfolio theory and investment analysis, bond pricing, modern asset pricing models for financial and real assets (CAPM, APT), an advanced analysis of the risk premium in discounting (interaction between the investment and financing decision), option pricing models, and modern theories of financial contracting (agency theory). The course also covers capital structure descisions and dividend policy.

Learning outcome

The course position and function in the study program:

The course is a mandatory 4th year course for students specializing in finance at the department of industrial economics and technology management. The course is mandatory for master students in financial economics.

The course objective/targets is to:
Knowledge on how to value financial assets (bonds, stocks, derivatives). Knowledge on how to value companies and real assets. Gain insights on how the company choose capitalstructure and dividend policy.

The course will give the following skills:
The course gives a deep understanding on various valuation methods from modern financal theory. The students will use this knowledge in solving practical managerial decision problems involving investment and financing issues.

Other objectives with the course:
Through exercises, the students will adapt insight in various parts of the curriculum using real data and spreadsheet modelling.

The candidates will through a mid-semester task gain training in how to value a company, construct sensitivity analysis. Through guestlectures, students will also revial how various parts of the course are implemented in practice.

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Learning methods and activities

Lectures and exercises. The course will be taught in English. If there is a re-sit examination, the examination form may change from written to oral.

Compulsory assignments

• Exercises
• Term report

Recommended previous knowledge

The course assumes some knowledge of financial calculus (such as present value calculation) and micro-economics, corresponding to TIØ4116 Microeconomics and Investment Analysis, and knowledge of financial accounting, as taught in e.g. TIØ4105 Management Accounting. Students can acquire this knowledge by studying the non-mandatory part of the course material.

Course materials

Given at course start.

Credit reductions