Applied Finance is a useful addition to undergraduate corporate finance courses for all MSc in Business students, except finance majors. Note that this course does not qualify as a prerequisite for advanced specialization courses in finance.
The first half of the course will revisit the basic principles for valuing financial assets and challenge the students to implement them. We will focus on portfolio theory (mean-variance analysis), the CAPM and some extensions thereof.
The second half of the course will first revisit the basic insight in capital structure with a particular focus on the Miller Modigliani Theorem and when it does and does not hold. We will apply this knowledge to some real world case studies, and a discussion of regulation of banks capital requirements if time allows. Lectures will be used to refresh the theory and are followed up by examples and exercises, small projects and cases that give students the opportunity to apply the concepts and techniques to real-world situations. The cases will provide hands-on experience with real data.
- Introduction to financial markets/instrument
- Portfolio tools
- Mean-variance analysis
- Capital Asset Pricing Model (CAPM)
- Capital structure in perfect markets
- Capital structure with taxes
- Capital structure with bankruptcy costs
Learning outcome knowledge
The goal of this course is to make students apply the fundamental concepts in investments and corporate finance. To this end students will use the analytical tools previously learned in real data applications with a focus on asset pricing models and solving business cases. The methods addressed in this course are at the very core of finance and are an essential part of the toolkit of financial managers. To better connect theory and practice, a crucial part of the course consists of projects using real data and cases.
By the end of the course, students who mastered it will have the financial background and the analytical tools necessary for making good investment decisions, understanding the paradigms in asset pricing, analyzing the impact of each financing type on firms' value, and having a better grasp of the financial news.
- Written assignment: 30%
- Written exam: 70%