Topic 1. Introduction to Corporate Finance. Overview of Financial Decisions.
— Financial management: goals, primary issues, investment and financing decisions
— Introduction to the course
— Company’s value and cash flows
— Accounting and market-based performance results
— Fundamental concepts in finance
— Corporate governance and agency problem
Topic 2. Interest Rates and Debt Securities. Bonds Valuation.
— Capital allocation process and financial markets
— Securitization and financial crisis – discussion
— Bond markets, factors that impact bond prices and yields
— Types of bonds. Pure discount bonds. Coupon bonds
— Interest rates. The structure of interest rates.
— Impact of the discount rate and timing of payments on bond valuation
— Term structure of interest rates
— Bond prices and yields. Current yield and yield to maturity
— Relationships between coupon rate, required return, and bond price
— Factors that impact bond value and yield
Topic 3. Stocks Valuation.
— Voting and non-voting shares
— Stock valuation methods. Dividend growth model
— Multiples approach to stocks valuation.
Topic 4. Equity Valuation and Risk. Capital Asset Pricing Model.
— Tradeoff between risk and return
— Risk and diversification
— Risk measures
— Stand-alone and portfolio risk
— Systematic and unsystematic risk
— CAPM and security market line
— Calculating beta coefficients
— Using CAPM for equity return estimation
— Capital raising case study: the role facilitators play within the business area, the links with investment bank and capital raising alternatives; loans, bonds, equity as instruments of company’s bridge financing; Block-trade exercise
Topic 5. Financing Decisions and Cost of Capital.
— Cost of equity capital
— Cost of debt
— Weighted average cost of capital (WACC)
— Approaches to cost of capital estimation
— Factors affecting WACC
— Initial Public Offering (IPO) and equity financing
Topic 6. Long-term Financial Decisions: Investment Valuation.
— Overview of capital budgeting decisions
— Forecasting investment projects cash flows
— Relevant cash flows. Inflation and cash flows
— Investment decision criteria: Net present value, Internal rate of return, Profitability index, Payback periods
— Risk factors in capital budgeting
Topic 7. Financial Statements Analysis and Corporate Valuation.
— Fundamentals of financial statements analysis: key financial ratios
— Limitations of ratio analysis
— Using financial statements information for analysis of company’s performance
— Free cash flow and company’s value
— Corporate valuation model
— Market value added (MVA)
Topic 8. Capital Structure and Dividend Policy.
— Capital structure theories and practice
— Capital structure and company’s value
— Financial leverage and financial risk
— Cash distributions and dividend policy
— Stock splits and stock dividends