Finance

COURSE OBJECTIVE
ACADEMIC AND RESEARCH SKILLS – STUDENTS CAN CONDUCT A BASIC INTERNATIONAL RESEARCH PROJECT FROM START TO FINISH ACADEMIC SKILLS (THREE AS)
After successfully completing this course, the student
• can analyze and demonstrate an understanding of problems in financial economics from different perspectives (Analysis)
• is able to recognize fundamental structures and to leave out irrelevant information (Abstraction)

BRIDGING THEORY AND PRACTICE KNOWLEDGE: Demonstrates theoretical and empirical knowledge concerning the relevant areas in international business administration After successfully completing this course, the student:
• can explain the basic theories, models and concepts of corporate finance and investments, and more specifically i) capital budgeting, ii) asset pricing, and iii) financial investment

APPLICATION: Can propose a solution to an international real-life business problem by applying relevant theories and methodologies. After successfully completing this course, the student:
• able to discuss current developments in financial economics
• is able to select the correct method and / or technique for quantifying, analyzing and solving a specific problem in financial economics

COURSE CONTENT
The performance of a corporation depends on how well managers succeed in creating shareholder value. We show you how to use tools that are offered by financial theory and help you just doing that: creating value. In this course we discuss three main issues in finance: capital budgeting, asset pricing and financial investments. The capital budgeting decision involves how firms select projects that create value. The theoretically optimal decision rule—the net present value method—is discussed, also in relation to other selection criteria that are applied in practice. The asset pricing part concerns the way financial assets are priced by the market. The focus is on the pricing of shares issued by firms and bonds issued by firms and governments. Questions raised are: How are the term structure of interest rates and promised coupon payments related to bond prices? What is the influence of the expected stream of dividends and the level of market risk of firm’s projects on the price of shares? The financial investment decision is approached from a portfolio perspective and ends with a discussion of the Capital Asset Pricing Model (CAPM).

TEACHING METHODS
Lectures Tutorials

TYPE OF ASSESSMENT
Written exam – Individual assessment
(Interim) tests – Individual assessment
Mandatory attendance tutorials

RECOMMENDED BACKGROUND KNOWLEDGE
1.1 Business Mathematics or equivalent