3376: Financial Markets and Corporate Strategy ( efterår 2010 - 10 ECTS )
Rammer for udbud
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Uddannelsessprog:
dansk
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Niveau:
COURSE LEVEL: Optional BSc (5 th semester) and MSc-course
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Semester/kvarter:
SEMESTER FOR WHICH THE COURSE DESCRIPTION APPLIES: Fall 2010
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Timer per uge:
NUMBER OF HOURS PER WEEK: 4 (2x2). 12 weeks
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Deltagerbegrænsning:
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Undervisningssted:
Århus
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Hovedområde:
Det Samfundsvidenskabelige Fakultet
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Udbud ID:
23391
Formål
LEARNING OBJECTIVES:
The goals are that the student - after having followed the course activities in Financial Markets and Corporate Strategy - can
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explain and apply the concept "derivatives", explain and apply derivative pricing by means of the binomial model. Explain and apply different parities and explain when American options should be exercised. Evaluate the price options by means of the binomial model and the Black-Scholes model and identify necessary inputs to these models.
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evaluate the value (based on CAPM/APT) of an investment's future uncertain payments in three equivalent ways: The Imperfect Tracking Method, The Risk-Adjusted Discount Rate Method, and The Certainty Equivalent Method. You can estimate the parameters, including unlevering, used in these methods. You can also, if possible, evaluate the value of an investment's future uncertain payments by means of Perfect Tracking, and you can argue whether this is possible or not.
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evaluate the value (based on CAPM/APT) of an investment's future uncertain payments when the firms and investors are subject to taxes. You can apply the pricing in two ways: Based on the APV-Method or the WACC-Method, where the first method is the most general method. You can identify the parameters, including unlevering, used in these methods.
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explain (when payments are subject to corporate as well as investor taxes) how a firm's total value depends on financing (debt/equity). Based on this you can calculate the value of a firm/an investment as a function of the financing. Finally, you can explain the Miller-equilibrium and apply this result to estimate the investor taxes.
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describe the development in American and (especially) Danish firm's total payout to shareholders. Explain the optimal form of payout and whether it is better to payout now or later. You can apply this knowledge to firm-specific cases. Finally, you can describe the empirical results concerning the relation between payout (subject to taxes) and the expected asset return.
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explain and apply the theories of conflict among shareholders and debtholders: The Debt Overhang Problem, The Shortsighted Investment Problem, The Assets Substitution Problem and The Reluctance to Liquidate Problem.
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explain and apply the theories of stakeholder's interests and how the theories influence the firm's choice of financing. Finally, you can describe the empirical results concerning this.
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explain and apply the theories of conflict among management and shareholders and how these conflicts influence owner structure, capital structure, and investment choice. Explain and apply the theories and problems concerning option-pay. Describe the development in Danish option-pay.
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explain and apply the theories concerning asymmetric information in Corporate Finance. This includes theory (among others) concerning payout to shareholders (Miller and Rock) and adverse selection (Myers and Majluff). Describe empirical facts which can be explained by revelation of information.
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explain problems, theory, and empirical facts in relation to mergers and acquisitions. Apply this knowledge to analyze cases based on a Danish setup.
Indhold
COURSE DESCRIPTION:
The central theme of the course is: foundations and methods for the firm's investment and financing decisions.
The course has two elements:
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1. Financial Markets (1/4)
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2. Valuing Real Assets, Capital Financial Structure, Incentives, Asymmetric Information, and Corporate Control (3/4)
COURSE SUBJECT AREAS:
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1. Financial Markets. Option Pricing
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2. Pricing of real assets subject to uncertainty and taxes
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3. Capital Structure and Payout policy
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4. Incentive problems among management, share holders, debt holders, and other stake holders. Asymmetric information. Mergers and acquisitions.
Faglige forudsætninger
REQUIRED COURSES (progression):
Compulsory courses in our BA-program or something equivalent.
For our Business Administration students this means that they must have taken 2310: Finance and Investments for management students
Underviser
LECTURER:
Johannes Raaballe
Undervisnings- og arbejdsform
TEACHING METHOD:
Lectures and discussions. Optional problem sets (exercises)
TEACHING LANGUAGE:
Danish.
Litteratur
LITERATURE:
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1. David Hillier, Mark Grinblatt and Sheridan Titman: Financial Markets and Corporate Strategy, European edition, McGraw-Hill, 2002. ISBN-13 978-0-07-711902-7. Chapter 7-8, 9.1, 11-20 (approximately 470 pages)
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2. Danske selskaber udbetaler udbytter som aldrig før. Mette Rosborg Aagaard og Johannes Raaballe. FinansInvest 1/2004
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3. Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers. Michael C. Jensen. AEA Papers and Proceedings, May 1986, Vol. 76, no. 2
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4. Optionsaflønning i danske børsnoterede selskaber. Ken L. Bechmann og Peter Løchte Jørgensen. Nationaløkonomisk Tidsskrift, 2003, no. 141
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5. Notes (approximately 60 pages)
In total approximately 570 pages.
Studieordning og bedømmelse
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Skriftlig, bedømt efter 7-skala med intern censur
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Skriftlig, bedømt efter 7-skala med intern censur
FORM OF ASSESSMENT:
Written final exam (4 hours)
EXAMINATION AIDS ALLOWED:
Only a pocket calculator as specified by the lecturer
