Course - Decision Theory and Corporate Finance - IF420
Decision Theory and Corporate Finance
Choose study yearAssessments and mandatory activities may be changed until September 20th.
About
About the course
Course content
Professional content
The purpose of the course is to give the student thorough knowledge of key elements in business economics analysis.
The main theme is modeling of rational individual decision-making behavior under uncertainty.
The course looks at key decisions in a company such as choice of capital structure, decision on which securities to be issued and distribution policy. Conflicts between shareholders and debtors, incentive pay to managers, securities and new types of securities are discussed. Adverse selection is used to describe companies' adaptation of capital structure and Moral Hazard is used to describe an investor's choice situation by investing in an entrepreneurial business.
The course will provide a good foundation for studying advanced literature in business economics.
- General decision-making in the form of decision-making and preferential arrangements.
- Axioms for rational decision-making under uncertainty.
- Preferential arrangement can be represented by expected benefit.
- Risk aversion, risk premium and security equivalent.
- Dominance analysis, subjective probabilities, identification of risk preferences.
- Information Analysis.
- Bayesian Learning and Value of Information
- Introduction to Empirical Analysis
- Investment Analysis and Capital Cost Selection of Capital Structure
- Which Securities To Issue
- Hybrid Types of Securities
- Asymmetric Information
- Selection Issue
- Dividend Policy.
- Conflicts between shareholders and debtors Incentive wages to managers
- Securities Mergers and acquisitions
Learning outcome
Knowledge
The student:
- Knows key decisions in a company such as choice of capital structure, decision on which securities to be issued and distribution policy.
- Knows key issues and current research in the field
- Knows different criteria for choosing between investment projects
- Gain insight into the theory and analytical methods associated with business investment, financing and allocation decisions.
Skills
The Student:
- Can analyze the company's investment, financing and allocation decisions.
General competence
The student:
- Can assess the uncertainty and risk of projects and evaluate the form of financing and payment policies in companies.
Learning methods and activities
Lectures, assignments, submissions
Compulsory assignments
- Compulsory attendance
- Mandatory papers
- Oral presentation of the term paper
Further on evaluation
The assessment consists of a written school exam of 4 hours and a group assignment where each part counts 50% of the overall grade. Both partial exams must be passed in order to receive a grade in the course.
There are three mandatory exercises.
- Mandatory assignment 1. -Attendance at a minimum of 70% of the lectures is mandatory where the students themselves must take turns presenting small papers and participate actively in academic discussions.
- Mandatory assignment.2. -Compulsory exercises/papers.
- Mandatory assignment 3. -Oral presentation of the term paper
In the event of a fail and/or improvement of the grade, it will be possible to retake the individual partial assessment.
In the case of a re-sit exam and the last exam after the course has been discontinued, the form of assessment may be changed to an oral exam
The course is open to all master's students at NTNU.
Required previous knowledge
None
Course materials
Literature Selected sections of the books: David Hillier, Mark Grinblatt, Sheridan Titman (2012) Financial Markets and Corporate Strategy: 2nd European Edition. McGraw Hill. Carol Alexander, Wiley (2008): Market Risk Analysis Volume 1: Quantitative Literature Selected sections of the books: David Hillier, Mark Grinblatt, Sheridan Titman (2012) Financial Markets and Corporate Strategy: 2nd European Edition. McGraw Hill. In addition, there are various articles and chapters from other books. Recommended support literature: Tirole, Jean (2006) The Theory of Corporate Finance. Princeton NJ, Princeton University Press. Brooks, Chris (2002) Introductory Econometrics for Finance. Cambridge, Cambridge University Press. Subject to changes. Final syllabus is given at the start of the semester. Learning forms and activities Lectures, assignments, submissions
Credit reductions
| Course code | Reduction | From |
|---|---|---|
| BA421 | 7.5 sp | Spring 2008 |
Subject areas
- Economics and Administration