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 2024-2025
Course code
BØK260
Version
2
Credits (ECTS)
10
Semester tution start
Autumn
Number of semesters
1
Exam semester
Autumn
Language of instruction
English
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
Recommended prerequisites
Exam
Form of assessment | Weight | Duration | Marks | Aid |
---|---|---|---|---|
Written exam | 1/1 | 3 Hours | Letter grades | Valid calculator |
Coursework requirements
Course teacher(s)
Course coordinator:
Olga Aleksandrovna RabanalStudy Program Director:
Tarjei Mandt LarsenMethod of work
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 |