COURSE MANUAL

Corporate Finance

Course Instructor:
Dr. Arnab Bose

Semester B 2019-20

Core Course

1
 Corporate Finance

Course Description:

This course is designed to introduce students to the concepts and techniques necessary to
analyze and implement optimal investment decisions including mergers and acquisitions by
firms. The course studies the effect of time and uncertainty on such decision making. Topics
include basic discounting techniques, stock and bond valuation, capital budgeting under
certainty and uncertainty, asset pricing models, capital structure of firms, financing and
dividend distribution, and introduction to derivatives including forwards, futures, options, and
swaps.

Course Aims and Relationship to Other Courses

This course is designed to introduce essential aspects of financial decision-making in

business. It aims to provide basic techniques which cover investment decisions, financing
decisions and dividend decisions. As such the course will build upon and complement other
BBA-LLB courses such as Company Law and Mergers and Acquisitions.

Intended Learning Outcomes for Students

By the end of this course, students should be able to:

1. Explain and be able to communicate the nature of finance and corporate finance in an
academic or a business forum;
2. Understand the nature and sources of finance; distinguish different types of business
structure, identify the major corporate financial decisions and corporate objective, and
describe some important basic concepts; discussion will include Public Private
Partnerships.
3. Be able to perform time-value calculations by using basic financial mathematics;
4. Explain how to value a firm/asset/project and apply skills in evaluation debt and
equity securities;
5. Explain the nature of risk and return, context of finance; Apply skills in evaluating
capital budgeting projects by using different methods of project evaluation
6. Critically apply and discuss the theories relating to corporate finance
7. Understand the role and functions of underlying concepts in Finance and
contextualize contemporary trends in Financial Management.

Learning Activities and Teaching Strategies

Lectures will be conducted in 2.5 hours block with approximately 1.5-hours on the lecture
and 1-hour workshop working through suggested problems and questions. Students are
required to attempt suggested problems and questions prior to the lecture. I will distribute
additional exercises in the class as required.
.

2
Course Plan

Topic and Description

Introduction to Finance

Introduction to Finance
Class Discussion and selected papers

Part 1 The Time Value of Money

Week 1 &2 Chapter 2 from Brealey, R., Myers, S., and Allen, F

Importance of Finance
Pathania, R., & Bose, A. (2014). An analysis of the role of finance in energy
transitions. Journal of Sustainable Finance & Investment, 4(3), 266-271.

Valuation and Pricing, Arbitrage, Bid and Ask

Class Discussion, Prof. Aswath Damodaran (open access notes)
Part 2
Introduction to Risk, Return, and the Opportunity Cost of Capital
Week 3
Valuing Bonds, Valuing Stocks

Chapter 3 & 7 from Brealey, R., Myers, S., and Allen, F & Chapter 3 & 12 from
Financial Management, 11th Edition - I.M. Pandey

Investment Criteria
Part 3 Net Present Value, Internal rate of Return, Profitability Index, payback period
Week 4 Assessment of Various Methods
Practice cases and sets
Chapter 5&6 from Brealey, R., Myers, S., and Allen, F
Nature of Finance

Nature and sources of Finance

The Cost of Capital: Cost of Debt and Equity, Weighted Average Cost of Capital
Chapter 17 from Brealey, R., Myers, S., and Allen, F
Part 4 MM proposition and the new financial architecture
Week
Class discussion, Bose, A. Financial Gradients: Methods and perspectives for
5 and 6
financial policy in sustainable development action.
https://prospernet.ias.unu.edu/wp-content/uploads/2012/09/SPC-learning-case-
1_final.pdf

Discuss

Part 5 Markets
Week 7 Financial Markets

3
 Class Discussion and Practice

Capital Market Theory, Return and Risk: The Capital-Asset-Pricing Model, An

Alternative View of Risk and Return: The Arbitrage Pricing Theory, Introduction
to Portfolio Theory
Chapter 8 from Brealey, R., Myers, S., and Allen, F

Discussion of New Age Finance; Start Up Financing and Corporate Finance

Practice and Advanced Topics
Corporate-Financing Decisions
Financial Models, NPV and IRR
Class Discussion and Practice
Part 6
Introduction to Long-Term Financing, Capital Structure: Basic Concepts, Limits
Week
to the Use of Debt, Valuation and Capital Budgeting for the Levered Firm,
8,9,&10
Dividend Policy.

Case studies (TBD)

Chapter 16 & 18 from Brealey, R., Myers, S., and Allen, F
Options, Futures, and Corporate Finance

Class Discussion

Real Options
Part 7 Theory and case study
Bose, A., Badhawan, A. D., Mukherjee, A., & Bandyopadhyay, S. (2013). Real
Options as a Decision-making Tool in Climate Finance Evaluated with a Case
Study on CCS. International Journal of Regulation and Governance, 13(1), 23-42.

Other reading (TBD)

Student Assessment

Component Percentage Weight

Class Participation 20%
Project 20%
Viva 10%
End-term Exam 50%
Component Percentage Weight

In-class Quizzes will be a part of class participation

Course Participants will be evaluated on your response to three (best three out of four) short
answer tests during the semester, worth 10 marks each. You will be given these quizzes
during the session and the marks will be totalled for the quiz mark out of 30. There will be

4
NO negotiation of these grades or of the quizzes. Students who miss a quiz will receive a
grade of 0 for that quiz. The quizzes will be announced during a prior lecture.

Class Participation:
Course Participants are expected to be prepared for class and constructively participate in
class discussions. I will cold call in class, and your responses will affect your class
participation grade. I expect you to come to class on time, well prepared and to make quality
contributions to class discussions. Repeatedly failing to meet this expectation will lead to the
loss of class participation grades.

Student Responsibilities and Conduct

Course Participants are expected to be familiar with and adhere to university policies in
relation to class attendance and general conduct and behaviour, including maintaining a safe,
respectful environment; and to understand their obligations in relation to workload,
assessment and keeping informed.

Class Policies
Cell Phones: Not allowed
Laptops and Similar Gadgets: As needed.

Grade Sheet

Percentage Grade Grade Grade Description

of Marks Value

80 and above O 8 Outstanding – Exceptional knowledge of the subject

matter, thorough understanding of issues; ability to
synthesize ideas, rules and principles and
extraordinary critical and analytical ability

75 – 79 A+ 7.5 Excellent - Sound knowledge of the subject matter,

thorough understanding of issues; ability to
synthesize ideas, rules and principles and critical and
analytical ability

70 – 74 A 7 Very Good - Sound knowledge of the subject matter,

excellent organizational capacity, ability to
synthesize ideas, rules and principles, critically
analyse existing materials and originality in thinking
and presentation

65 – 69 A- 6 Good - Good understanding of the subject matter,

ability to identify issues and provide balanced
solutions to problems and good critical and analytical
skills

60 – 64 B+ 5 Fair – Average understanding of the subject matter,

limited ability to identify issues and provide
solutions to problems and reasonable critical and

5
 Percentage Grade Grade Grade Description
of Marks Value

analytical skills

55 – 59 B 4 Acceptable- Adequate knowledge of the subject

matter to go to the next level of study and reasonable
critical and analytical skills.

50 – 54 B- 3 Marginal- Limited knowledge of the subject matter

and irrelevant use of materials and, poor critical and
analytical skills

Below 50 F 0 Fail - Poor comprehension of the subject matter;

poor critical and analytical skills and marginal use of
the relevant materials. Will require repeating the
course

Academic Honesty and Plagiarism

The University rules regarding plagiarism will apply. Students are expected to be familiar
with and adhere to university policies in relation to plagiarism.
Prescribed and Recommended Readings

Recommended Readings
 Financial Management: Theory and Practice by Prasanna Chandra, 2007
 Corporate Finance Theory and Practice (WSE) by Aswath Damodaran, 2007
 Financial Management, 11th Edition - I.M. Pandey
 Brigham, E. F and Huston J. F. Fundamentals of Financial Management, Concise 7th
edition, South Western, 2011.
 Brealey, R., Myers, S., and Allen, F., Principles of Corporate Finance, McGraw-Hill,
10th edition, 2011.
 Financial Management, 11th Edition - I.M. Pandey

Additional Notes to Course Manual:

6
Assessment Pattern

Even though the exact assessment pattern will depend on University rules, broadly it can be
said that this course will require two assignment submissions, one in the form of a photo
essay or an urban-space atlas, and second is a complete narrative of an urban space/leisure
concept. The latter can be a written narrative or even a quasi-documentary-film/audio-visual
with a written portion. The various formats and narratives for assignments will be discussed
in class.

Evaluation and Grading will be based on methods associated with Bloom’s Taxonomy.

source: https://cft.vanderbilt.edu/guides-sub-pages/blooms-taxonomy/ (accessed August

2017)
Bloom's Taxonomy was created in 1956 under the leadership of educational psychologist Dr
Benjamin Bloom in order to promote higher forms of thinking in education, such as
analyzing and evaluating concepts, processes, procedures, and principles, rather than just
remembering facts (rote learning).

Pedagogy

The pedagogy follows the Non-Invasive Learning Methods1 (NILM ©), which is similar to
methods found in experiential learning. There is also an interesting ‘Action Research’
component where the collective effort made by students and the facilitator(s) for this course
may be dovetailed in corresponding participant led platforms, centers or societies.

1
Refer to TEDx talk by Arnab Bose. Link: https://www.youtube.com/watch?
v=PhBlK4twDIk