Course Code And Course Title

BUSS621 ADVANCE CONCEPTS IN CORPORATE FINANCE

Course Introduction

This course introduces students to an in-depth analysis of financial planning and management with
emphasis on capital structure, dividend payout policies, cost of capital, capital budgeting, risk and other
special topics. The course serves as a framework for understanding a broad range of corporate financial
decisions. Real time data and directed readings will be used to enhance learning.  The theme of this
course will be the integration of value-based financial decision making as a means of improving strategic
operating results and investor returns. The advanced corporate finance class will extend and further refine
the core concepts developed in the introductory class with particular attention given to the cost of capital
in various settings including emerging and private markets; corporate control transactions involving
strategic and financial sponsors; distressed investing; the use of real options; and the role of hybrid
securities in capital structure decisions. The course is intended for those students interested in pursuing a
career focused on the strategic financial decision-making in the corporate setting as an employee, owner,
or advisor.

Learning Objectives
The objective of the course is to build up on the students’ prior knowledge of corporate finance concepts
to attain a rigorous working knowledge of advanced corporate finance. We will cover topics such as
equity offerings, mergers and acquisitions, private equity, corporate governance, financial distress as well
as advanced research methodologies.

Learning Outcomes
After successful completion of this course, students will be able to have:

a. To advance students’ understanding in the theoretical and real-life evidence of topics in Corporate
Finance.
b. Explain financial markets and functions of corporate finance
c. Calculate and interpret time value of money
d. Estimate bond prices and identify factors that affect bond prices
e. Estimate the value of a common stock and evaluate if the stock is under or over priced
f. Calculate different components of cost of capital and the overall cost of capital of a corporation
g. Calculate efficient portfolio using stock data
h. Understand and evaluate capital budgeting decision rules and explain how real options affect these
decisions
i. Classify and distinguish various types of risk and their relation to portfolio choice
j. Describe and calculate a firm’s capital structure and interpret how leverage and firm value are related
using Miller-Modigliani propositions
k. Explain how a firm’s dividend policy is set and how it affects firm value

Course Pre-requisite
The course builds on a solid knowledge in corporate finance, financial markets, investments and financial
accounting.
Prescribed Text
Ross, S.A., Westerfield, R.W., Jaffe, J.F., and Roberts, G.S. 2015. Corporate Finance. 7th Canadian
Edition. McGraw-Hill ISBN: 978-007133957-5

Recommended Books/Reading Material

- Brealey R. and Myers S. and Allen F., Principles of Corporate Finance, (12th ed.), McGraw-Hill,
(2016).
- Grinblatt M. and S. Titman, Financial Markets and Corporate Strategy, (2nd ed.), McGraw-Hill,
(2001).
- Berk J. and DeMarzo., Corporate Finance, Pearson International Edition, (2007).

Teaching Methodology
Lectures, Case Studies, Research articles, Research Projects, Class discussions
Students are advised to read the relevant materials before class sessions to enhance their class
participation and understanding. Students are also advised to solve as many problems at the end
of each relevant chapter as will be possible.

COURSE CONTENT

Chapter 1 Introduction to Corporate Finance

Chapter 4 Financial Markets and Net Present Value
Chapter 6 How to Value Bonds and Stocks
Chapter 20 Issuing Equity Securities to the Public
Chapter 21 Long-term Debts
Chapter 15 Long-term Financing
Chapter 8 Net Present Value and Capital Budgeting
Chapter 9 Risk Analysis, Real Options and Capital Budgeting
Chapter 10 Risk and Return: Lessons from Market History
Chapter 11 Risk and Return: The Capital Asset Pricing Model
Chapter 12 An Alternative View of Risk and Return: The Arbitrage Pricing Model
Chapter 13 and 13A Risk, Return, and Capital Budgeting
Chapter 16 Capital Structure: Basic Concepts
Chapter 17 Capital Structure: Limits to the Use of Debt
Chapter 18 Valuation and Capital Budgeting for the Levered Firm
Chapter 19 Dividends and Other Payouts

Final Examination

Course Evaluation

Midterm exam: 30 marks

Final exam: 40 marks
Sessional: 30 marks (Quizzes, Assignments, Class Participation, Presentation)
Total: 100 marks