Course Title : Corporate  Finance (2nd year students)
Department : Finance
Code : E2102-00
Semester : 1 Duration : 39 hours + Final Exam

Home work : 39 hours

Core module

 ECTS credits : 4

Language of instruction : English
Lecturer André Cabannes (andre.cabannes@m4x.org)

Diplomas : Ecole Polytechnique (1972-1975), DEA Dauphine (1976), PhD Stanford (1979)
General objectives

Understand the relationship between time, value, money and risk. Basic principles of value creation.
Present the techniques to evaluate physical investments and financial investments.
The course will contain a review of accounting techniques to measure value, and an introduction to the main probabilistic tools needed in finance.
Detailed program

Lesson 1 : Introduction to firms, money, value ; Accounting for cash and for value ; Investments, Finance

Lesson 2 : Review of the mechanisms of double-entry accounting, Income statement, Balance sheet ; Reading and interpreting a balance sheet

Lesson 3 : Financial analysis, Ratios

Lesson 4 : Cash flow statement (difference between a CF statement and an Income statement) ; working with real data from public financial sources (yahoo finance)

Lesson 5 : Cost accounting, budgeting, computing the CF of a projected physical investment

Lesson 6 : Probability model, random variables, expectation

Lesson 7 : Distribution, density of probability, histogram, variance ; future CF as random variables ; definition of the risk of a security ; the risk averse attitude of investors ; comparing securities ; pricing securities

Lesson 8 : Present value, opportunity cost of capital, DCF, IRR ; IRR is a generalisation of profitability ; full fledged examples of evaluation of physical investment projects

Lesson 9 : Financial investment ; securities and portfolios of securities ; the effect of diversification ; systematic risk and return of a security

Lesson 10 : Portfolio evaluation ; an overview of the CAPM theory

Lesson 11 : Bonds

Lessons 12 & 13 : Students presentations

Final exam
Teaching methods Lecturer's presentation, discussion, in-class exercises.
Assessment & tests Group presentations 50%.
Final exam  50%.
Bibliography Notes for the course : http://www.lapasserelle.com/clermont/corporate_finance

Further books :
Ross, Westerfield and Jordan, Fundamentals of Corporate Finance, McGraw-Hill/Irwin, 6th edition, 2002
Brealey and Myers, Principles of Corporate Finance, McGraw-Hill/Irwin, 7th edition, 2002
Weygandt, Kieso and Kimmel, Accounting principles, John Wiley, 6th edition, 2002
Prerequisite Good English Language skills.