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Swedish name: Corporate Finance and Investments D
This syllabus is valid: 2011-09-05 and until further notice
Syllabus for courses starting after 2011-09-05
Course code: 2FE106
Credit points: 15
Education level: Second cycle
Main Field of Study and progress level:
Business Administration: Second cycle, has only first-cycle course/s as entry requirements
Grading scale: Three-grade scale
Responsible department: Business Administration
This finance course is intended for students who want to increase their familiarity with the practical applications of corporate finance and investments. Module 1. Advanced Corporate finance, 7.5 hp/credit points Module 2. Investments, 7.5 hp/credit points Module 1. Advanced Corporate Finance, 7.5 ECTS Our primary intent, in offering this subject, is to provide an integrated overview of the most important concepts in corporate finance. The subject extends the students knowledge about the context in which corporations operate. It also serves as the foundation for the package of subjects that the student will select within the Finance program. Topics to be covered in this module include capital market imperfections and methods developed in finance to control risk and reduce uncertainty in the financial management of corporations. Issues in corporate policy and strategy, based on theoretical developments in finance are presented. Students will learn the processes involved in the valuation of debt and equity and the methods that have been used to manipulate external perceptions of business outcomes. Optimization strategies and approaches to recovery from financial distress are also covered. Ethical issues and the social responsibility of corporations and their managers are highlighted. Expected learning outcomes Upon completion of this subject students should have sufficient knowledge to: Assess the impact of information asymmetry on corporate financial policy decisions from the selection of particular modes of financing to dealing with the problems associated with financial distress. Explain the theoretical basis and applicable strategies applied in regard to issues of corporate control. Compare and contrast leverage strategies in ideal versus real capital markets and be able to predict the impact of alternative taxation systems on the use of debt in a firms capital structure. Determine optimal levels of corporate debt and/or equity and be able to price an offering of either under different financing strategies. Formulate and logically defend a position in regard to current issues, such as corporate control and governance, which confront corporations today Focus of instruction This subject will be presented using large group lectures as well as smaller group workshops and/or seminars. Examination modes Students will be required to undertake a project addressing current issues that have divided theoreticians in the discipline. This is worth 30% of their assessment. Students will also be required to undertake a final written exam. It will be comprised of both calculations and discussion questions but no multiple choice questions. The written exam will be worth 70% of their assessment. See also below. Module 2. Investments, 7.5 ECTS Students undertaking this module are provided with a specialization at an advanced level in investment analysis. Students will be provided with the knowledge needed to understand relevant theories and models in the field. They will be able to apply these to stock and bond portfolio management. In order to enhance the students understanding there are several group assignments in which the students are presented with realistic investment problems to be analyzed and solved using appropriate computer software. The module is used to provide students with a lasting conceptual framework from which to both view the investment process and to analyze future ideas and changes in the investment environment. This module covers modern portfolio theory including the concept of utility. Equilibrium pricing implications of portfolio theory are embodied in the capital asset pricing model (CAPM). This concept is extended, in the investments course, by introducing, the principles of no-arbitrage and the resulting arbitrage pricing theory (APT). Fixed income securities are reviewed in terms of bond portfolio management, including duration analysis, convexity and immunization. Derivative securities (options, futures, swaps and convertibles securities), their pricing and relevant parity-relationships are emphasized. The creation of synthetic securities and the construction and maintenance of various hedging strategies for both portfolios and individual securities using different derivatives are also discussed. Finally, students are taught how to measure the performance of managed portfolios and to understand the risks and opportunities inherent in international investments. Expected learning outcomes On successful completion of this module, students should be able to: use a portfolio optimization program to identify optimal portfolios for different levels of risk aversion construct index models that are representative of selected risk class, industry or regional portfolios and explain their application to the management of an investment portfolio apply active and passive portfolio management techniques to both fixed securities and equities evaluate portfolio performance using risk-adjusted metrics, performance attribution, and other methods explain the use of various derivatives in hedging investments and their impact on potential returnsvalue portfolios containing derivative securities Focus of instruction The core topics of this module will be covered by lectures, although seminars, cases and computer exercises utilizing Excel may also be used. Students are expected to take active part in every aspect of the course module. Examination modes Examination will be based on a written comprehensive examination 70%, and on successful completion of group or individual coursework as assigned. See also below.
See respectively module.
University: Courses in Business Administration (75 ECTS) At Basic level (A-level) and Intermediate level (B-level) a minimum of 60 ECTS in Management, Marketing, Accounting and Finance courses. At the C-level (Bachelor), a minimum 15 ECTS. Statistics or similar 7.5 ECTS. Language: Proficiency in English equivalent to Swedish upper secondary course English B (IELTS (Academic) with a minimum overall score of 6.5 and no individual score below 5.5. TOEFL PBT (Paper-based Test) with a minimum score of 575 and a minimum TWE score of 4.5). TOEFL iBT (Internet-based Test) with a minimum score of 90 and a minimum score of 20 on the Writing Section)
See respectively module.
Examination of Modules 1-2 will be based upon the students active participation in seminars, a written comprehensive examination, and successful completion of group or individual coursework as assigned. The following grading system will be used: Pass with distinction (Väl godkänd, Vg, 75% or more), Pass (Godkänd, G, 50% or more) Fail (Underkänd, U, less than 50%). To receive the grade Pass with distinction in the course, the student must have achieved at least 75% of the total of points in the separate modules or the equivalent In case of failure on seminar participation or individual and group assignments, compensating assignments must be completed in accordance with instructions given on each occasion. Students who do not pass at the time of the normal written examination will be offered an opportunity to sit a further examination within 2-3 weeks. Beyond that, additional examination opportunities normally arise every academic year, one week prior to the start of the autumn term. When a student has failed an examination on two occasions, he or she has a right to have another grading teacher. A written request for an alternative examiner should be handed to the director of studies no later than two weeks before the next examination opportunity. Rules and regulations concerning the production of academic texts and correct referencing will be applicable to all written assignments. Lectures are normally not obligatory. However attendance is expected because the lectures are designed to facilitate students towards achieving course specific learning objectives. In addition lectures often provide insightful explanations of, and can supplement and provide contrast to, the course litterateur and other relevant course materials. Student who has passed an examination can not redo the examination to get a higher grading. Grades on the course are awarded when students have passed all examinations and compulsory course elements. Academic credit transfer Academic credit transfers are according to the University credit transfer regulations.
This is a course at the D-level in a MSc-degree at Umeå University. The course can also be included in study programs in Business Administration and Economics at Umeå School of Business.
The literature list is not available through the web. Please contact the faculty.