Corporate Finance and Incentives (F)

Course content

This is the Economics programme’s central course on Finance, giving a broad insight into the core matter of the field. Building on earlier relevant courses from the Bachelor’s programme in Economics, it provides the common ground for later elective Finance courses.

 

The course develops your understanding of the different asset classes in financial markets, including bonds, stocks, forwards, futures and options. Based on considerations of investor demand, standard asset pricing methods are introduced. Market efficiency and investor behaviour in this context is discussed. The pricing methodology is used to analyse the choice of investment projects inside firms, including the management of real options. Turning to classic corporate finance issues, the course explores the optimal capital structure of the firm, its optimal dividend policy, risk management, and the incentives of the firm’s management.

 

The asset pricing models include the Capital Asset Pricing Model (CAPM), the Arbitrage Pricing Theory (APT), risk-neutral pricing, and the Black-Scholes formula. Excel is used to solve problems in these areas.

Education

MSc programme in Economics – elective course

 

Bacheloruddannelsen i økonomi – Prioriteret valgfag på 3. år

The Danish BSc programme in Economics - prioritized elective at the 3rd year

 

Sidefagsuddannelsen i Økonomi-Erhvervsøkonomi - valgfag på KA delen

 

The course is part of the Financial line at the MSc programme in Economics,   symbolized by ‘F’.

 

MSc programme in mathematics-economics

Learning outcome

After completing the course the student is expected to be able to:

 

Knowledge:

  • Identify, describe and discuss financial problems encountered by firms and investors,
  • Account for and understand the core models and methodologies in the field of Financial Economics,
  • Define the core concepts of Financial Economics,
  • Criticize and reflect upon the main models in Finance, relating them to current issues in financial markets and corporate finance.

 

Skills:

  • Select and apply core models and methodologies to analyse standard problems in Finance, partly using Excel,
  • Master the analysis of given problems, assessing models and results, putting results into perspective,
  • Argue about financial problems and issues in a scientific and professional manner, drawing upon the relevant knowledge of the field.

 

Competencies:

  • Bring into play the achieved knowledge and skills on new formal problems,
  • Select and evaluate solutions to complex, unpredictable situations in financial markets or corporations,
  • Approach more advanced models, methodologies and topics in Finance.

The lectures introduce the material from the syllabus. Students take a first reading of the material before the lecture, in order to engage in informed discussions during lectures.

This course also offers exercise classes meeting every week. Weekly exercise sets will become available through Absalon. Students consider how to solve the exercises before the class meets – working with the exercises provides the best chance to deeply understand the course material. Problem solving helps to realize which parts of the syllabus are harder to learn.

Some exercise sets contain a mandatory exercise that must be handed in to the teaching assistants and not later than the given deadlines. The solutions to a number of such exercises must be approved as a condition for the final exam.

The main textbook for the course:

  • Jonathan Berk and Peter DeMarzo: Corporate Finance, Fifth Edition, Global Edition, Pearson. (27 June 2019: Edition changed from forth to fifth)

  • Some supplementary shorter texts and current media clippings are supplied through Absalon.

  • Peter Norman Sørensen (2019): "Lecture Notes on Asset Pricing," available through Absalon.

• It is recommended to have followed the course "Business Economics" (Erhvervsøkonomi) at the Bachelor of Economics before attenting the course.
• It is recommended to have followed the course "Probability Theory and Statistics" (Sandsynlighedsteori og Statistik) at the Bachelor of Economics before attending the course.
• It is recommended to have followed the courses Microeconomics I and II at the Bachelor of Economics before attending the course.
• The student will benefit from attending the course Microeconomics III (at the Bachelor of Economics) before or at the same time as the course.

Schedule:
2 hours lectures 1 to 2 times a week from week 36 to 50 (except week 42).
2 hours exercise classes a week from week 36/37 to 50 (except week 42).

Schema:
The overall schema for the BA 3rd year and Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"
BA i Økonomi/KA i Økonomi => "Kurser og undervisning" => "Planlægning og overblik" => "Dit skema"

Timetable and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Se skema" (See schedule) at the right side of this page. E means Autumn. The lectures is shown in each link.

You can find the similar information partly in English at
https:/​/​skema.ku.dk/​ku1920/​uk/​module.htm
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E19; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”

Please be aware regarding exercise classes:
- The schedule of the exercise classes is only a pre-planned schedule and can be changed until just before the teaching begins without the participants accept. If this happens it will be informed at the intranet or can be seen in the app myUCPH and at the above link
- That the study administration allocates the students to the exercise classes according to the principles stated in the KUnet.
- If too many students have wished a specific class, students will be registered randomly at another class.
- It is not possible to change class after the second registration period has expired.
- If there is not enough registered students or available teachers, the exercise classes may be jointed.
- The student is not allowed to participate in an exercise class not registered, because the room has only seats for the amount of registered student.
- The teacher of the exercise class cannot correct assignments from other students than the registered students in the exercise class except with group work across the classes.
- That all exercise classes will be taught in English.

ECTS
7,5 ECTS
Type of assessment
Written examination, 3 hours under invigilation
The exam assignment is given in English and must be answered in English.
____
Aid
Without aids
Marking scale
7-point grading scale
Censorship form
No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
____
Criteria for exam assessment

Students are assessed on the extent to which they master the learning outcome for the course.

 

To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.

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Single subject courses (day)

  • Category
  • Hours
  • Exam
  • 3
  • Preparation
  • 133
  • Lectures
  • 42
  • Class Instruction
  • 28
  • English
  • 206