Course - Advanced Investment Ananlysis - TIØ4360
Advanced Investment Ananlysis
About
About the course
Course content
The course gives a thorough treatment of modern investment analysis, with emphasis on the valuation of flexibility associated with investments in real assets (real options analysis). The course also includes interaction between different real options, game-theoretic aspects and aspects of modern financial contracting (agency theory). One or more larger, more practically orientated real options problems are also comprised in the course, as well as analysis of related corporate decisions such as mergers. Hedging of risks by buying or selling financial contracts such as derivatives is also included.
Learning outcome
The courses place and role in the study program: The course is aimed at science and technology students who want a more profound understanding of how investment decisions regarding projects are made and who want to obtain sufficient knowledge of investment analysis to be equal discussion partners of economist regarding the valuation of projects, including the strategic aspects of future expansion possibilities (real options analysis). The course can be taken as an independent course, but also as an extension of TIØ4146 Finance for Science and Technology students. The extension consists of a more comprehensive analysis of investment decision, including interaction between different real options, game-theoretic aspects and aspects of modern financial contracting (agency theory), as well as one or more larger, practically orientated real option problems. Hedging and an alternative derivation of the most important option pricing models are also part of the extension.
The course is intended to convey the following knowledge:
General knowledge about the role of financial markets in valuing investments in real assets and in the reduction and management of risk (hedging). The course conveys specific knowledge about pricing derivatives such as options, futures and forwards and how these derivatives can be used in investment analysis and trading strategies that reduce risk (hedging). Specific knowledge about how option interaction and game theory affect real options analysis. Specific knowledge about how option pricing techniques can be used for corporate decision regarding the choice of projects, credit risk and mergers. Specific knowledge about how financial contracts affect economic decisions regarding projects. Practical examples and exercises will help students to develop the necessary skills to apply this knowledge in practical decision making problems regarding investment, hedging and risk management.
Learning methods and activities
Lectures and exercises. The course will be taught in English. The examination paper will be made available in English only, but students can answer in English or Norwegian.
Further on evaluation
The re-examination, if any, can be oral instead of written.
Recommended previous knowledge
The course assumes some knowledge of financial calculations, such as discounting, to the level taught in TIØ4258 Technology Management. Students can acquire this knowledge by studying some non-mandatory parts of the course material.
Course materials
To be announced at semester start
Subject areas
- Financial Economics
- Technological subjects
Contact information
Course coordinator
Lecturers
Department with academic responsibility
Department of Industrial Economics and Technology Management