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, 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). Knowledge of these topics is applied to practical decision making problems in performance analysis, exchange rate risks, dividend policy, mergers and acquisitions and financial and operational risk analysis and management.

Learning outcome

The course gives students a thorough understanding of the pricing methods from the modern theory of finance and develops the students’ skills to use this knowledge in practical, corporate decision making problems regarding investment, financing, risk analysis and risk management.

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