Course - Decision Theory and Corporate Finance - IF420
IF420 - Decision Theory and Corporate Finance
About
Examination arrangement
Examination arrangement: School exam
Grade: Letter grades
| Evaluation | Weighting | Duration | Grade deviation | Examination aids |
|---|---|---|---|---|
| School exam | 100/100 | 5 hours | D |
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
Mandatory activities: Two paper assignments
Compulsory assignments
- Paper 1
Further on evaluation
One compulsory paper must be passed in order to take the exam.
Admission to study programme is required.
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 | To |
|---|---|---|---|
| BA421 | 7.5 | SPRING 2008 |
No
Version: A
Credits:
7.5 SP
Study level: Second degree level
Term no.: 1
Teaching semester: SPRING 2025
Language of instruction: Norwegian
Location: Trondheim
- Economics and Administration
Examination
Examination arrangement: School exam
- Term Status code Evaluation Weighting Examination aids Date Time Examination system Room *
- Spring ORD School exam 100/100 D INSPERA
-
Room Building Number of candidates - Summer UTS School exam 100/100 D INSPERA
-
Room Building Number of candidates
- * The location (room) for a written examination is published 3 days before examination date. If more than one room is listed, you will find your room at Studentweb.
For more information regarding registration for examination and examination procedures, see "Innsida - Exams"