In this course, the instructor will explain the basics of finance theory (modern portfolio theory) and discuss the basic theory of managerial finance (corporate finance) with a focus on the relationship between corporate management and the capital market.
First, the instructor will explain the basics of modern finance theory, such as corporate investment decision-making, capital cost, and CAPM (capital asset pricing model). Further, the instructor will introduce the discovery of behavioral finance, which emerged as a challenge to modern finance theory, to help students understand the realities of the capital market. Then, students will study topics which could be considered the central topics for managerial finance—corporate capital structure, investment policy, and corporate governance. To conclude, the entire class will debate cases related to the realities of corporate investment decisions and corporate governance using the financial knowledge gained in this course. This course is planned for greater emphasis on corporate investment decisions than on security investments.
By the end of this course, students will be able to:
1. Understand the basics of portfolio theory and managerial finance and be prepared to work on issues applying financial theories.
2. Understand the mechanism of a capital market and corporate management, the core of a capitalist society, and have knowledge for optimal management and market structuring.
Capital Budget, Cost of Capital, Modern Portfolio Theory, Behavioral Finance, Capital Structure, M&A, Corporate Governance
|Intercultural skills||Communication skills||Specialist skills||Critical thinking skills||Practical and/or problem-solving skills|
This course consists of lectures and case studies.
The lectures will follow a textbook. Case studies will require working in groups and active participation in the class. Students must do the following:
1. Read the textbook chapter listed for each class before the lecture.
2. Prepare in groups for the case discussions in classes 11 and 12.
|Course schedule||Required learning|
|Class 1||Introduction: Corporate management and capital market||Read and understand significant points of Chapter 1|
|Class 2||No arbitrage rule and investment decision||Read and understand significant points of Chapter 3|
|Class 3||Value of time and interest rate||Read and understand significant points of Chapters 4 & 5|
|Class 4||Capital Budgeting||Read and understand significant points of Chapters 6 & 7|
|Class 5||Fixed income||Read and understand significant points of Chapter 8|
|Class 6||Equity pricing||Read and understand significant points of Chapter 9|
|Class 7||Capital market and risk premium||Read and understand significant points of Chapter 10|
|Class 8||Capital asset pricing model||Read and understand significant points of Chapter 11|
|Class 9||Cost of capital||Read and understand significant points of Chapter 12|
|Class 10||Capital structure 1||Read and understand significant points of Chapters 14 & 15|
|Class 11||Capital structure 2||Read and understand significant points of Chapters 14 & 15|
|Class 12||Case study: Management Buyout of Pokka Corporation||Prepare for class discussion on the assigned case by group|
|Class 13||Corporate governance||Prepare for class discussion on the assigned case by group|
|Class 14||Finance theory and practice: Discussion with CFO (TBD)||Research growth history of the firm and prepare at least one question to the CFO|
|Class 15||Summary and exam|
Corporate Finance: Second Edition, 2011, Jonathan Berks and Peter DeMarzo, Peason Education
Distribute in class
Class participation 30%
Final exam 70%
Class Participants are required to have completed the course of Basic Accounting or have equivalent knowledge of accounting.