Advanced Corporate Finance
| Module title | Advanced Corporate Finance |
|---|---|
| Module code | BEA3018 |
| Academic year | 2024/5 |
| Credits | 15 |
| Module staff | Professor Bill Peng (Convenor) |
| Duration: Term | 1 | 2 | 3 |
|---|---|---|---|
| Duration: Weeks | 11 |
Module description
Note: cannot be taken with BEE3059 Asset Pricing or BEA3008 Finance for Managers
This module provides a thorough treatment, grounded in the academic literature and pertinent for the practitioner, of the following key financial questions which are faced by the investors and managers of firms – are capital markets efficient (to what extent); how should an investment portfolio be constructed; how to price options; how to use financial derivatives to manage commodity, interest rate and foreign exchange rate risks; how to evaluate merger and acquisition deals.
Additional Information:
Internationalisation
The content of this module takes an international perspective, particularly when considering the financial market, mergers and acquisitions and the foreign exchange rate risks.
External Engagement
This module content meets the standards and is accredited by major accreditation bodies, including the ACCA, ICAEW, ICAS and CIMA.
Employability
Students acquire knowledge in this module, including a solid understanding of basic financial theory, which is highly relevant to jobs related to finance and accountancy. This module also offers an opportunity to develop their numeracy and logical thinking skills.
Sustainability
All of the resources for this course are available on the ELE (Exeter Learning Environment).
Module aims - intentions of the module
This module is designed to introduce students to corporate finance theory and enable them to apply it to some of the main problems faced by investors, financial managers and corporate decision makers, in terms of financial risk management. In particular, this module provides a thorough treatment of the key aspects in the financial decision-making process in a corporation, including market efficiency, risk and return, portfolio theory, option pricing, risk management using financial derivatives, mergers and acquisitions.
Intended Learning Outcomes (ILOs)
ILO: Module-specific skills
On successfully completing the module you will be able to...
- 1. explain the risk-return paradigm for investment analysis and derive models for portfolio theory;
- 2. illustrate and derive factors models (CAPM and APT) and calculate the cost of capital;
- 3. describe and explain the Efficient Market Hypothesis and behavioural finance arguments;
- 4. derive option pricing via the binomial method;
- 5. use financial derivatives to manage interest rate and foreign exchange rate risks;
- 6. use financial derivatives to manage foreign exchange rate risk;
- 7. evaluate leasing and off-balance-sheet financing.
ILO: Discipline-specific skills
On successfully completing the module you will be able to...
- 8. interpret financial data in the light of established theories;
- 9. apply and criticise finance models in a real world context;
- 10. develop theoretical arguments based on analytical reasoning.
ILO: Personal and key skills
On successfully completing the module you will be able to...
- 11. use financial data for information retrieval and numerical analysis;
- 12. develop written communication skills in debating discussion topics and producing solutions to problems;
- 13. work independently as well as in groups, and develop effective and efficient self-study techniques.
Syllabus plan
- Risk and return
- Markowitz portfolio theory and CAPM
- Factors model and asset pricing
- Market efficiency and behavioural finance
- Options: binomial option pricing model and Black-Scholes model
- Real options: extensions and applications
- Interest rate risk management with financial derivatives
- Foreign exchange rate risk management with financial derivatives
- Mergers and acquisitions
- Review session
Learning activities and teaching methods (given in hours of study time)
| Scheduled Learning and Teaching Activities | Guided independent study | Placement / study abroad |
|---|---|---|
| 42 | 108 | 0 |
Details of learning activities and teaching methods
| Category | Hours of study time | Description |
|---|---|---|
| Scheduled learning and teaching activities | 22 | Lectures |
| Scheduled learning and teaching activities | 10 | Tutorials |
| Scheduled learning and teaching activities | 10 | Seminars |
| Guided Independent Study | 108 | Reading, research, reflection; Preparation for lectures, tutorials, seminars; Preparation for assessments. |
Formative assessment
| Form of assessment | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|
| Assigned work for each tutorial | 3 hrs preparation by student / 1 hr in-class discussion | 1-13 | Suggested solutions |
| Mid-term Mock Exam | 1 hour in class | 1,2,8-13 | Suggested solutions and individual feedback meetings |
Summative assessment (% of credit)
| Coursework | Written exams | Practical exams |
|---|---|---|
| 0 | 100 | 0 |
Details of summative assessment
| Form of assessment | % of credit | Size of the assessment (eg length / duration) | ILOs assessed | Feedback method |
|---|---|---|---|---|
| In class Test | 20 | 1 hour | 1-5, 8-13 | Suggested solutions; Students will be offered opportunity to view scripts; Students who failed to pass will be invited for dedicated help sessions. |
| Final exam | 80 | 2 hours | 1-13 | Suggested solutions; Students will be offered opportunity to view scripts |
Details of re-assessment (where required by referral or deferral)
| Original form of assessment | Form of re-assessment | ILOs re-assessed | Timescale for re-assessment |
|---|---|---|---|
| In class test (20%) | Individual assignment (2,000 words) (20%) | 1-5, 8-13 | August/September Reassessment Period |
| Final exam (80%) | Examination (2 hours) (80%) | 1-13 | August/September Reassessment Period |
Re-assessment notes
Should a re-assessment of the in class test be required for this module, it will be by means of an alternative individual assignment.
Indicative learning resources - Basic reading
The module’s main recommended texts are:
- Lumby, S., & Jones, C. (2019). Corporate finance: Theory and practice (10th ed.). Andover: Cengage Learning.
- Brealey, R., Myers, S. & Allen, F. (2020). Principles of corporate finance (13th ed.). Maidenhead: McGraw-Hill Education.
- Hillier, D., Ross, S., Westfield, R., Jaffe, J., & Jordan, B. (2020). Corporate finance (4th European ed.). Maidenhead: McGraw-Hill Education.
For wider reading, there are a large number of texts upon the subject areas of this module. Titles such as ‘Financial Management’, ‘Finance’, ‘Corporate Finance’, ‘Investments’, ‘Investment Analysis’ and similar may be found in the library and through any good book seller. Having the most up-to-date edition of such books is rarely important.
Indicative learning resources - Web based and electronic resources
ELE: https://vle.exeter.ac.uk/course/view.php?id=4684
Indicative learning resources - Other resources
Other materials/sources which you are expected to access/use will be apprised to you during the module.
| Credit value | 15 |
|---|---|
| Module ECTS | 7.5 |
| Module pre-requisites | BEA2018 Corporate Finance |
| Module co-requisites | Cannot be taken with BEA3008 or BEE3059 |
| NQF level (module) | 6 |
| Available as distance learning? | No |
| Origin date | 01/03/2013 |
| Last revision date | 03/02/2021 |
