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IB9E4 - Advanced Corporate Finance

  • Module code: IB9E4
  • Module name: Advanced Corporate Finance
  • Department: Warwick Business School
  • Credit: 10

Content and teaching | Assessment | Availability

Module content and teaching

Principal aims

"This course extends the valuation of firm assets and liabilities to cases where they contain embedded contingent claims (options), reconciling the option prices of assets and liabilities with the Capital Asset Pricing Model (CAPM). After reviewing the traditional (static) Corporate Finance paradigms and clarifying the necessary Black Scholes and Merton technology, it goes on to explain the implications for (dynamic) corporate asset & liability management when optionalilty is present. It covers the valuation of Warrants & Convertibles and optimal capital structure management with costly bankruptcy. Mergers and Acquisitions are discussed in this framework and examples cited where the Modigliani Miller value additivity principle does not hold. Finally, so called ""Real Options"", the valuation of the embedded options in physical (not financial) asset ownership are evaluated."

Principal learning outcomes

Subject knowledge &understanding/key skills: Determine expected returns on holding options; Subject knowledge &understanding; Discuss the determinants of a firm's capital structure; Subject knowledge &understanding/cognative skills; Discuss firm restructuring and the relevance of Agency Theory; Subject knowledge &understanding; Discuss the role of insider information in market mictostructure. Cognative skills: Discuss and evaluate the determinants of a firm's cost of capital. Subject-specific/key skills: Value firm components using simple option sharing rules; Discuss why traditional NPV rules are deficient and evaiuate simple Real Option examples.

Timetabled teaching activities

"Total contact hours: 35 hours Lectures per week: Three per day over five days, ie 15 @ 1.5hrs each = 22.5 Seminars game sessions per week: Two per day over five days, ie 10@ 1.25hrs each = 12.5 Module duration (weeks, if applicable:) 5 days Other (please describe):e.g. distance: Guest speaker to be selected and learning, intensive weekend teaching invited."

Departmental link

https://my.wbs.ac.uk

Module assessment

Assessment group Assessment name Percentage
10 CATS (Module code: IB9E4-10)
A1 (Assessed work only) Assessed Course Work 20%
Assessed Course Work 80%

Module availability

This module is available on the following courses:

Core

N/A

Optional Core

N/A

Optional
  • Postgraduate Taught Business Administration (N1P2) - Year 10
  • Postgraduate Taught Business Administration (N1P2) - Year 2
  • Postgraduate Taught Business Administration (N1P2) - Year 3
  • Postgraduate Taught Business Administration (N1P2) - Year 4
  • Postgraduate Taught Business Administration (N1P2) - Year 5
  • Postgraduate Taught Business Administration (N1P2) - Year 6
  • Postgraduate Taught Business Administration (N1P2) - Year 7
  • Postgraduate Taught Business Administration (N1P2) - Year 8
  • Postgraduate Taught Business Administration (N1P2) - Year 9
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 10
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 2
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 3
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 4
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 5
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 6
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 7
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 8
  • Postgraduate Taught Business Administration (Executive) (N1P9) - Year 9
  • Postgraduate Taught Business Administration (Distance Learning) (N1PR) - Year 2
  • Postgraduate Taught Business Administration (Distance Learning) (N1PR) - Year 3
  • Postgraduate Taught Business Administration (Distance Learning) (N1PR) - Year 4
  • Postgraduate Taught Business Administration (Distance Learning) (N1PR) - Year 5