Feng Chia University
College of Finance
Graduate School of Finance
Fall, 2017
COURSECorporate Finance 公司財務(財金碩一)
INSTRUCTORMing Jing Yang, Ph.D. (楊明晶)
Associate Professor
OFFICE1234, Business Building
OFFICE HOURS6:00 p.m. - 7:00p.m. Tuesday andWednesday
6:00 p.m. - 8:00 p.m. Thursday
TELEPHONE(04)2451-7250 Ext. 4158
E-MAIL ADDRESS
WEB SITE
TEXTS. A. Ross, R. W. Westerfield, J. Jaffe, and B. Jordan,Corporate Finance,
11thEdition,2016, McGraw-Hill. (華泰書局代理).
R. A. Brealey, S. C. Myers, and F. Allen, Principles of Corporate Finance, 11th
Edition, 2014, McGraw-Hill.
OBJECTIVEThis is an advancedseminar course in the field of corporate finance. It will discuss the major topics offinancial asset valuation,option valuation,risk-returnanalysis, corporate investment decision, capital structure decision, dividend policy,financial derivatives and hedging risk, evaluation of financial performance, and international corporate finance, etc. Class presentation and participation are strongly encouraged. Research projects will be assigned to students. The purpose is to familiarize graduate students with the theories and concepts learned from the class and apply them to the real financial world.
PREREQUISITESMathematics, Accounting, Economics, Statistics,
and Introduction to Financial Management.
EXAMINATIONSThe course grade will be determined as follows:
Performance:50%
Presentation(10%)
Projects (15%) Bonus: 12/19, Due: 12/26, (3:10p.m.)
Participation( 5%)
Quizzes (20%)
Final Exam(comprehensive)50% 2018/01/11, Thursday, 2:10~4:30p.m.
COURSE OUTLINE
Corporate Finance
Chapter / Topic01 / Introduction to Corporate Finance
Goals of the Corporations and Financial Managers
Agency Costs
Asset Valuation:
04 / Discounted Cash Flow Valuation
Effective Interest rate, Continuous Compounding,
Perpetuity, Growing Perpetuity, Annuity, Growing Annuity,
Financial Markets, Present Value, and Future Value,
Interest Rate, Consumption Decisions, and Investment Decisions
08, 09 / Valuation of Bonds and Stocks
Bonds: Valuation, Yield to Maturity
Stocks: Valuation, Dividend Growth Model, NPVGO Model,
and Price-Earning Ratio
Financing with Derivatives:
22, 23 / Options and Corporate Finance
Options, Call Options, Put Options
Two-State Option Pricing Model, Black-Scholes Option PricingModel
Stocks and Bonds as Options
Real Options
24 / Warrants and Convertibles
Warrant Pricing
Value of Convertible Bonds (Straight Bond Value and Conversion Value)
Risk:
11 / Analysis of Risk and Return: The Capital Asset Pricing Model (CAPM)
The Return and Risk for Individual Securities and Portfolios,
Efficient Portfolio, Diversification, The Optimal Portfolio, Beta, CAPM
12 / Analysis of Risk and Return: The Arbitrage Pricing Theory (APT)
Factor Models, CAPM and APT
Capital Budgeting:
05 / Net Present Value versus Other Alternative Investment Rules
Net Present Value, Internal Rate of Return, Profitability Index,
Payback Period, and Average Accounting Return
06 / Making Capital Investment Decisions
Cash Flow and Capital Budgeting, Incremental Cash Flows
Investments of Unequal Lives: The Equivalent Annual Cost Method
13 / Capital Budgeting, Risk, Cost of Capital, and Valuation
Financial Leverage and Beta, Cost of Equity and Debt, WACC
Capital Structure:
16 / Capital Structure: Basic Concepts Modigliani and Miller: Propositions I and II, No Taxes
Corporate Taxes, Value of the Levered Firm, WACC
17 / Capital Structure: Disadvantages of Debt Financing
Bankruptcy Costs, Agency Costs
Miller Model, Personal Taxes
18 / Valuation and Capital Budgeting for the Levered Firm Adjusted Present Value (APV)
Flow to Equity (FTE)
Weighted Average Cost of Capital (WACC)
Interactions of Investment and Financing Decisions
Dividend Policy:
19 / Irrelevancy of Dividend Policy
Personal Taxes, Issuance Costs, Agency Costs, Information Asymmetry
Derivatives and Hedging Risk:
25 / Forward, Futures, Swaps, Duration Hedging
Analysis of Financial Statement:
03 / Financial Statements Analysis and Long-Term Planning
Financial Ratio Analysis
International Finance:
31 / International Corporate Finance
Foreign Exchange Markets,
Purchasing Power Parity (PPP), Interest Rate Parity (IRP)
International Bond Markets
Special Topics:
29 / Mergers and Acquisitions
Synergy from Acquisitions
30 / Financial Distress Bankruptcy Liquidation and Reorganization
14 / Corporate Financing Decisions and Efficient Capital Market
Efficient Market Hypotheses and Evidence
20 / Issuing Securities to the Public
Announcement of New Equity and the Value of the Firm
Initial Public Offering (IPO)
15 / Long-Term Financing
Callable Bonds and Bond Refunding