Corporate Finance (BØK260)

This introductory course in finance primarily focuses on how companies select investments, and then determine financing for the investment decisions. The purpose of the course is to give the students the necessary knowledge about the concepts and methods used to make investment decisions. The main focus is on financial investments (stocks and bonds), project financing and various investment decisions for projects are reviewed. An introduction to options is also given. The language of instruction and the exam language is English.


Course description for study year 2023-2024. Please note that changes may occur.

Facts

Course code

BØK260

Version

2

Credits (ECTS)

10

Semester tution start

Autumn

Number of semesters

1

Exam semester

Autumn

Language of instruction

English, Norwegian

Content

  • Introduction - course context in economy and financial markets
  • Cash flows
  • Interest calculation / financial mathematics
  • Decision criteria (Net present value, internal rate of return, payback, etc.)
  • Risk and return
  • Cost of capital
  • Market efficiency
  • Financing of investments
  • International finance
  • Options
  • Risk management

Learning outcome

Knowledge

On completion of the course, students will be able to understand:

  • General principles of investment analysis
  • Why we focus on cash flows and not profit
  • Discount rate / cost of capital
  • The various decision criteria for an investment. NPV, IRR, etc
  • The concept of total risk, and how it is determined
  • Portfolio theory and its significance for diversification.
  • Beta and the Capital Asset Pricing Model (CAPM)
  • Weighted Average Cost of Capital (WACC) and when to use it
  • Market efficiency
  • Options and risk management in international finance

Skills

Upon completion of this course, students will be able to:

  • make investment calculations and decisions for projects
  • apply discounting rules
  • use various decision criteria for both equities and bonds
  • apply the portfolio theory to different investment options and calculate Beta
  • apply the CAPM model
  • calculate the weighted average cost of capital
  • calculate the present value of investment projects and discuss risk in investment decisions
  • evaluate different financing options
  • evaluate options and arbitrage opportunities (as opposed to estimating option premiums)

Required prerequisite knowledge

None

Recommended prerequisites

BØK102 Financial accounting - principles and analysis, BØK108 Mathematical method for economists, BØK195 Financial and management accounting - an introduction, BØK265 Microeconomics

Exam

Form of assessment Weight Duration Marks Aid
Written exam 1/1 3 Hours Letter grades Valid calculator

Coursework requirements

Mandatory assignments
Weekly individual assignments: all assignments must be approved in order to take the final exam.

Course teacher(s)

Course coordinator:

Olga Aleksandrovna Rabanal

Method of work

Two sessions comprising four hours (48 hours) are lectures. In order to stimulate a good learning environment, two-way communication with the students is necessary. The students are responsible for participating in lectures, with questions, comments and discussion. It is therefore crucial that students prepare well for each lecture. The expected workload in this course is approximately 300 hours, including self-study.

Overlapping courses

Course Reduction (SP)
Finance 1 (BØK260_1) 10
Capital investment and decision theory (ØK0111_1) 2
Managerial Finance (NH0523_1) 6
Managerial Finance (NH0523_A) 6
Financial management (ØK0012_1) 6
Finance 1 (ØK0012_2) 6
Finance 1 (ØK0012_A) 6
Finance 1 (BØK130_1) 10
Economic analysis (BHO200_1) 5
Corporate Finance (BHO395_1) 10
Corporate Finance in the hospitality industry (BHO395_2) 10

Open for

Business Administration - Bachelor's Degree Programme

Course assessment

There must be an early dialogue between the course coordinator, the student representative and the students. The purpose is feedback from the students for changes and adjustments in the course for the current semester.In addition, a digital course evaluation must be carried out at least every three years. Its purpose is to gather the students experiences with the course.

Literature

Search for literature in Leganto