FINANCIAL POLICIES & INVESTMENT STRATEGIES - 2

The goal of the course is to apply fundamental principles of corporate finance to real companies and demonstrate how investors evaluate and value firms, given the adopted financial policies. The perspective is the firm value maximization: the focus is on principles that guide corporate manager decisions on financing and investing. In detail, business decisions are classified into three groups: investment, financing, and dividend decisions. At the end of the course, students will be able to fully understand and apply the process of valuation that represents the standard activity of a security analyst in a broker house.

Attending and actively participating to classes, studying the textbook and the other suggested materials, including the real cases used during the course, will allow students to:
1. Knowledge and comprehension
• acquire advanced knowledge of fundamental models of corporate finance and know how to apply them in practice, to comprehend how in reality the investment, financing and dividend decisions work.

2. Ability to apply knowledge and comprehension
• master the techniques to determine the cost of capital of firm in oder to discount the expected cash flows according to risk they embed
• identify the company optimal financial structure
• comprehend the consequences of the choices of dividend policies
• apply methods and tools acquired during the course to interpret the dynamics of corporate finance

3. Judgment ability
• evaluate the sustainability of the firm financial structure and its equilibrium
• evaluate the effects of different investment policies that the firm may choose

The main prerequisite is a robust knowledge of financial and management accounting and basic corporate finance.

Lecture 1
Topic 1 Capital Structure Chapter 18 (Corporate Finance by Hullier David, 4 th European
Edition)
Lecture 2
Topic 2: Capital Structure and Bankruptcy cost Chapter 19 (Corporate Finance by Hullier
David, 4 th European Edition)
Lecture 3
Topic 3: Formulas to calculate NPV of levered firm and Financial Distress Chapters 20 and
29 (Corporate Finance by Hullier David, 4 th European Edition)
Lecture 4
Topic 4: Debt financing Chapter 16 (Corporate Finance by Hullier David, 4 th European
Edition)
Lectures 5 & 6
Topic 5: Bond Pricing and yield curve Chapter 13 (Investments, Levy and Post, 2005)
Lectures 7 & 8
Topic 6: Duration and Convexity Chapter 14 (Investments, Levy and Post, 2005)
Lecture 9
Topic 7: Market Efficiency Chapter 12 (Investments, Levy and Post, 2005)
Lecture 10
Topic 8: Active versus Passive portfolio management Chapter 12 (Investments, Levy and
Post, 2005)
Lecture 11
Topic 9: Portfolio performance evaluation Chapter 22 (Investments, Levy and Post, 2005)
Lectures 12&13
Topic 10: Options and Black & Scholes Formula Chapter 22 (Corporate Finance by Hullier
David, 4 th European Edition)
Lecture 14

Topic 11: Options in Corporate Finance: Extensions and application Chapter 23 (Corporate
Finance by Hullier David, 4 th European Edition
Lecture 15
Revision lecture

Aswath Damodaran, Applied Corporate Finance: A User's Manual – 4th Edition,
ISBN-13: 978-1-118-80893-1

Supplementary study material - such as slides, papers, and exercises - will be prepared and made available on Moodle by the class's Professor.

The course grade will be based on the course project (first half) and a final written exam (second half). The course will conclude with a written final exam composed of multiple choice questions both of a qualitative (theoretical) and a quantitative (exercises) nature. The overall grade of the final written exam will be based on a total of 31 points.

The course in conducted through frontal classes. Students are required to interract above normal to prepare specific project materials to be used for their assessment
All the material discussed in class will be available to students in Moodle. Classes combine fundamental principles of the subject with their practical application through exercises and real cases.

English

scritto