FINANCIAL INSTITUTIONS AND CORPORATE FINANCE - 2

The course is one of the core educational activities of the Bachelor's Degree Programme in Business Administration and Management. It is based on two modules: the first one provides the understanding of the functions that financial markets and intermediaries, in particular commercial banks, offer for the management and development of companies; the second one instead provides students with a basic knowledge of the main issues related to the financial management of non financial companies, with a focus on the investment policies, the financial structure choices and the cost of capital estimation.
The aim of the first part of the course is to provide understanding the conditions for companies to raise funds through financial markets and intermediaries. The aim of the second part is to provide the basic knowledge of the corporate finance, its principles and operating tools useful for the investing and financing corporate decisions in order to verify their contribution to the value creation.
In the first module, for what concerns financial markets, the course deals with the conditions defining risk and return profile of stocks and bonds; for what concerns financial institutions, the course deals with the main services and constraints to which the management of commercial banks is subject.
In the second module, after the presentation of the typical problems that the financial managers face and their objectives, the course will focus specifically on the financial planning process, the company financial decisions, within the financial markets, with a particular interest on the investment decisions, the financial structure choices and the cost of capital estimation.

Knowledge and understanding:
1) knowledge and understanding of the principal techniques of financial planning of firms;
2) knowledge and understanding of the different techniques to evaluate financial instruments and company's investments and select those most valuable;
3) knowledge and understanding of the cost of capital and its determinants;
4) knowledge and understanding of the determinants of the financial structure of companies.

Applying knowledge and understanding:
1) ability to formulate the most appropriate assumptions to develop a reliable financial plan;
2) ability to detect the most relevant information to properly implement the different investment's evaluation criteria and select the most valuable ones;
3) ability to estimate the cost of capital and its determinants;
4) ability to analyze the company financial structure decisions of companies.

Making judgements:
1) ability to interpret critically the indications provided by the company financial planning;
2) ability to properly manage the indications provided by the capital budgeting techniques in order to choose the most convenient investment in terms of value creation;
3) ability to use critically the cost of capital for company evalution purposes;
4) ability to compare critically the different financial structure decisions of companies.

Students must know the contents of Principles of management and international accounting, in particular for what concerns financial accounting, the annual report and main financial statements.

1. Introduction to Corporate Finance;
2. Basics of Corporate Governance
3. The Financial Planning process: aims, purpose and correlation with the company strategies; the forecasting parameters (assumptions); the pro-forma financial statements;
4. The Discounted Cash Flow (DCF) Valuation;
5. The Valuation of Bonds: Zero Coupon Bonds (ZCBs), level coupon bonds, consols; the yield-to-maturity (YTM);
6. The Valuation of Stocks: the Dividend Discount Model (DDM), the Gordon Growth Model (GGM), the Net Present Value of Growth Opportunities (NPVGO) ;
7. Basics of Corporate Valuation;
8. The Net Present Value and other investment rules (the payback period, the discounted payback period, the Average Accounting Return (AAR), the Internal Rate of Return (IRR), the Profitability Index (PI));
9. Risk and Cost of Capital: the cost of equity capital; the company beta and its determinants (cyclicality of revenues, operating leverage and financial leverage); the cost of capital with debt (the Weighetd Average Cost of Capital-WACC);
10. The Modigliani Miller theory.

Financial Institutions & Corporate Finance - McGraw-Hill
2018 edition

CUSTOM PUBLISHING
Universita Ca' Foscari Venezia
Department of Management

The assessment is based on a written exam, closed-notes/closed book, composed by three sections.
The first section is a set of 5 multiple choice questions: for each question the right answer scores 5 points, a wrong one scores - 0,25, no answer scores 0. This section assesses the general knowledge of course topics.
The second section is an open question which assesses the knowledge of a specific topic of the course and the ability to expose it clearly. This section scores 0 - 10 points.
The third section is an exercise which assesses the capability to apply the notions learned in the course to specific problems. This section scores 0 -10 points.
The overall grade of the module will be summation of the three sections.
The grade of this module of the course, if equal or greater than 18/30, will be averaged with what received in the second module.
During the course students will be also invited to join a “Stock Market Game”. Students are required to join the Game at the beginning of the first module of the course. The participation is optional, but its assessment will add up to three points to the final written exam grade (average of the two modules). Groups of students (2 - 4 students) are required to manage a virtual portfolio of stocks using the stock simulator of Investopedia. The groups, working under the supervision of a tutor, will prepare periodic reports describing their investment decisions.
The aim of the Game is to apply fundamental analysis to stock selection.
The assessment will be based both on the quality of the reports and interaction with the tutor.

Upfront lectures and teaching material (slides and simulations of exam exercises) available on the e-learning platform moodle.unive.it
The participation to the Stock Market Game adds to the course also aspects of active learning.

English

Accessibility, Disability and Inclusion
Accommodation and support services for students with disabilities and students with specific learning impairments

Ca’ Foscari abides by Italian Law (Law 17/1999; Law 170/2010) regarding support
services and accommodation available to students with disabilities. This includes students with
mobility, visual, hearing and other disabilities (Law 17/1999), and specific learning impairments (Law 170/2010). If you have a disability or impairment that requires accommodations (i.e., alternate testing, readers, note takers or interpreters) please contact the Disability and Accessibility Offices in Student Services: disabilita@unive.it.

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