Course Details
Course Information Package
Course Unit Title | CORPORATE FINANCE II | ||||||||
Course Unit Code | AFIN204 | ||||||||
Course Unit Details | |||||||||
Number of ECTS credits allocated | 5 | ||||||||
Learning Outcomes of the course unit | By the end of the course, the students should be able to:
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Mode of Delivery | Face-to-face | ||||||||
Prerequisites | AFIN101,AFIN102 | Co-requisites | NONE | ||||||
Recommended optional program components | NONE | ||||||||
Course Contents | Mergers and Acquisitions: economies of scale, economies of vertical integration and other efficiency gains arising from mergers and acquisitions, type of growth opportunities achieved through mergers and acquisitions, dubious reasons for mergers and acquisitions, valuation of merged businesses having different capital structures Forwards and Futures: definitions, examples of using forwards and futures for hedging risk, valuation of forwards and futures on stocks or stock indices with/without dividends, forwards and futures on foreign currency, valuation of commodity futures, the cost-of-carry and convenience yield, differences between forward and future contracts Option pricing theory: basic no arbitrage restrictions for options and put-call parity, dividends and optimal early exercise of American options, risk-neutral pricing and the derivation of binomial tree parameters for option pricing, binomial trees for pricing of options of various types Risk management: risk management using options and futures, delta hedging and other Greeks, swaps and interest rate risk Application of option pricing theory in the valuation of corporate assets and liabilities: Merton’s model for the valuation of equity and risky debt and credit spreads, sensitivity analysis on Merton’s model, extensions of Merton’s model with endogenous default | ||||||||
Recommended and/or required reading: | |||||||||
Textbooks |
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References |
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Planned learning activities and teaching methods | The taught part course is delivered to the students by means of lecturers, conducted with the help of computer presentations and the use of the board. Lecture notes and other course material like spreadsheet examples are available to students through the web. | ||||||||
Assessment methods and criteria |
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Language of instruction | English | ||||||||
Work placement(s) | NO |