FIN-410 / 4 crédits

Enseignant: Arnold Marc

Langue: Anglais

Remark: MA3 only. Special schedule: see the IF website https://go.epfl.ch/fe


Summary

The course covers advanced topics in corporate finance such as the design and valuation of corporate securities, the issuing process for theses securities, real options, and their implications for valuation, financial structuring, and business development. It also applies the theory to case studies.

Content

Keywords

Real options - financial contracting - financing decisions

Learning Prerequisites

Required courses

  • Derivatives
  • Introduction to finance
  • Stochastic calculus

Learning Outcomes

By the end of the course, the student must be able to:

  • Describe and apply the different valuation methods for corporate securities, such as discounted cash flow, peer comparison, and real option methods, and evaluate their relative performance in different settings.
  • Explain the security issuance process, contrast the differences in this process for the issuance of equity and debt securities, and the agency costs associated with this process.
  • Derive the optimal investment and financing strategies in structural real option models, and economically interpret the different parts of the equations.
  • Discuss the methods for the valuation of real options and apply these concepts to problem settings in case studies.
  • Coordinate and develop ideas how to solve specific problems related to the valuation of corporate securities and financial structuring, while working in a team.
  • Structure and compose a document with solutions to questions related to the valuation of real options, and present these solutions in front of other students.
  • Apply the intuitions and concepts to practical applications and the development of business ideas.

Transversal skills

  • Plan and carry out activities in a way which makes optimal use of available time and other resources.
  • Communicate effectively, being understood, including across different languages and cultures.
  • Negotiate effectively within the group.
  • Make an oral presentation.
  • Demonstrate the capacity for critical thinking

Teaching methods

Lectures, assignments, case studies, and presentations.

The assignments and case studies are open book and done in groups of students

Expected student activities

The students are expected to attend the lectures.

The students will work in groups to solve problem sets and case studies. They will have to hand in their solutions to the problem sets and case studies, which will be graded and count 40% towards the final grade. The case studies will also lead to short class presentations by teams of students.

Assessment methods

40% Assignments and case studies

60% Final exam

Final exam is closed-book

Resources

Bibliography

Dixit and Pindyck, Investment under Uncertainty, Princeton University Press

Berk and DeMarzo, Corporate Finance, Pearson Education

Tirole, The Theory of Corporate Finance, Princeton University Press

Ressources en bibliothèque

Dans les plans d'études

  • Semestre: Automne
  • Forme de l'examen: Pendant le semestre (session d'hiver)
  • Matière examinée: Real options and financial structuring
  • Cours: 2 Heure(s) hebdo x 14 semaines
  • Exercices: 1 Heure(s) hebdo x 14 semaines
  • Semestre: Automne
  • Forme de l'examen: Pendant le semestre (session d'hiver)
  • Matière examinée: Real options and financial structuring
  • Cours: 2 Heure(s) hebdo x 14 semaines
  • Exercices: 1 Heure(s) hebdo x 14 semaines
  • Semestre: Automne
  • Forme de l'examen: Pendant le semestre (session d'hiver)
  • Matière examinée: Real options and financial structuring
  • Cours: 2 Heure(s) hebdo x 14 semaines
  • Exercices: 1 Heure(s) hebdo x 14 semaines

Semaine de référence

 LuMaMeJeVe
8-9     
9-10   EXTRANEF126 
10-11    
11-12    
12-13     
13-14     
14-15     
15-16     
16-17  EXTRANEF126  
17-18    
18-19    
19-20     
20-21     
21-22     

Mercredi, 16h - 19h: Cours EXTRANEF126

Jeudi, 9h - 12h: Cours EXTRANEF126