04521 - Corporate Finance

Learning outcomes

At the end of the course, the student acquires the subjects related to investment and financing decisions of companies. Decisions are developed from the perspective of shareholder value creation. The maximisation of shareholder value is assumed to be the fundamental objective of management; the main reference is to companies listed on official markets, which tend to be large. The fundamental objective of the course is to lead students to answer two fundamental questions in the context of managing a company: - What investments should a company make? - How should it raise the money to finance these investments? All this is preceded by the acquisition of the necessary basic skills relating to the calculation of interest on loans, the discounting of cash flows generated by investment projects, and the construction of a repayment plan for bonds.

Course contents

Module 1

- Main financial regimes

- Present value and cash flows

- Valuation of annuities

- Valuation of bonds and shares

Module 2

- The firm's financial function 

- Criteria for evaluating and selecting investments

- Investment decisions

- Management of corporate working capital

- Risk-return relationship

- The Capital Asset Pricing Model

- Risk and cost of capital

- Forms of financing

- Choices of financial structure

- How much debt a company should take on

- Valuing stocks

- Firm valuation

- Dividend policy

Readings/Bibliography

R. A. Brealey, S. C. Myers, F. Allen, A. Edmans, S. Sandri, Principles of Corporate Finance, McGraw Hill Italia, ninth edition, 2024

Additional readings may be assigned during the course in order to explore topics of particular relevance.

Teaching methods

Lectures and exercises

Assessment methods

There are two methods of assessment: Option A) one written examination for Module 1 and two written examinations for Module 2, to be taken during and at the end of the course. The first written examination for Module 1 and Module 2 takes place in November: these are known as ‘mid-term examinations’. The second written examination for Module 2 may be taken during one of the two examination sessions at the end of the course. The Module 1 examination may also be taken during these sessions at the end of the course, if it was not taken in November. The marks for the two mid-term exams for Module 2 are added together to give a maximum mark of 30 with distinction. The final mark for the course will be the weighted average of the marks achieved in the exams (Module 1: one exam; Module 2: two exams). Module 1 accounts for 25 per cent; Module 2 accounts for 75 per cent.
Option B) a written examination covering the entire course syllabus (Module 1 + Module 2) to be taken on one of the official examination dates. Please note: to pass the examination, students must achieve a mark of at least 18 in both the first and second modules.

The exams are closed-book.

It will be possible to renounce the grade and retake the examination in the official appeals established according to the school's rules. The examination will be distance or face-to-face on the basis of the rules to be established at school and university level.

The grade will be graded as follows

- <18: insufficient

- 18-23: sufficient

- 24-27: good

- 28-30: excellent

- 30 and 30L: excellent

IT IS NOT POSSIBLE TO TAKE ANY TEST WITHOUT REGISTRATION IN AlmaEsami (no exceptions allowed for any reason).

Teaching tools

Slides and exercises.

Office hours

See the website of Francesco Baldi

See the website of Giacomo Andreani