Module

Advanced Corporate Finance

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).

Full module specification

Module title:Advanced Corporate Finance
Module code:BEA3018
Module level:3
Academic year:2020/1
Module lecturers:
  • Dr Bill Peng - Convenor
Module credit:15
ECTS value:

7.5

Pre-requisites:

BEA2018  Corporate Finance

Co-requisites:

Cannot be taken with BEA3008 or BEE3059

Duration of module: Duration (weeks) - term 2:

11

Module aims

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.

 

ILO: Module-specific skills

  • 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

  • 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

  • 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

Learning activities and teaching methods (given in hours of study time)

Scheduled Learning and Teaching ActivitiesGuided independent studyPlacement / study abroad
421080

Details of learning activities and teaching methods

CategoryHours of study timeDescription
Scheduled learning and teaching activities22Lectures
Scheduled learning and teaching activities10Tutorials
Scheduled learning and teaching activities10Seminars
Guided Independent Study108Reading, research, reflection; Preparation for lectures, tutorials, seminars; Preparation for assessments.

Formative assessment

Form of assessmentSize of the assessment (eg length / duration)ILOs assessedFeedback method
Assigned work for each tutorial3 hrs preparation by student / 1 hr in-class discussion1-13Suggested solutions
Mid-term Mock Exam1 hour in class1,2,8-13Suggested solutions and individual feedback meetings

Summative assessment (% of credit)

CourseworkWritten examsPractical exams
01000

Details of summative assessment

Form of assessment% of creditSize of the assessment (eg length / duration)ILOs assessedFeedback method
In Term Test201 hour1-5, 8-13Suggested solutions; Students will be offered opportunity to view scripts; Students who failed to pass will be invited for dedicated help sessions.
Final exam802 hours1-13Suggested solutions; Students will be offered opportunity to view scripts
0

Details of re-assessment (where required by referral or deferral)

Original form of assessmentForm of re-assessmentILOs re-assessedTimescale for re-assessment
In Term Test & ExamExam (100%)1-13August

Re-assessment notes

Should a re-sit be required for this module, it will be by means of one two-hour examination accounting for 100% module marks [ILOs 1-13]

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

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.

 

Module has an active ELE page?

Yes

Indicative learning resources - Web based and electronic resources

ELE: https://vle.exeter.ac.uk/course/view.php?id=4684

www.ft.com

www.uk.yahoo.com/finance

Indicative learning resources - Other resources

Other materials/sources which you are expected to access/use will be apprised to you during the module.

Origin date

01/03/2013

Last revision date

15/07/2020