Finance

2019-2020

Course Objective

ACADEMIC AND RESEARCH SKILLS – STUDENTS CAN CONDUCT A BASIC
INTERNATIONAL RESEARCH PROJECT FROM START TO FINISH

ACADEMIC SKILLS (THREE AS)
After successfully completing this course, the student
• can analyze and demonstrate an understanding of problems in financial
economics from different perspectives (Analysis)
• is able to recognize fundamental structures and to leave out
irrelevant information (Abstraction)

BRIDGING THEORY AND PRACTICE

KNOWLEDGE: Demonstrates theoretical and empirical knowledge concerning
the relevant areas in international business administration
After successfully completing this course, the student is:
- familiar with the Hirshleifer model and the
Separation Theorem by Fisher;
- able to apply the net present value method;
- able to explain the the pros and cons of alternative
investment selection methods;
- able to explain the value of a security (share /
bond);
- able to determine the risk and return characteristic of a portfolio of
securities;
- able to designate the optimal portfolio given
the utility function of an investor and the Capital Market Line (CML);
- able to determine the cost of capital of a project on the basis of
of the CAPM;
- able to explain what is meant by the efficient market hypothesis and
you understand what the implications of an efficient market are;
- able to explain and apply basic concepts in financial economics.

APPLICATION: Can propose a solution to an international real-life
business problem by applying relevant theories and methodologies.

After successfully completing this course, the student is:
- able to apply theoretical knowledge into practice.

Course Content

The performance of a corporation depends on how well managers succeed in
creating shareholder value. We show you how to use tools that are
offered by financial theory and help you just doing that: creating
value. In this course we discuss three main issues in finance: capital
budgeting, asset pricing and financial investments. The capital
budgeting decision involves how firms select projects that create value.
The theoretically optimal decision rule—the net present value method—is
discussed, also in relation to other selection criteria that are applied
in practice. The asset pricing part concerns the way financial assets
are priced by the market. The focus is on the pricing of shares issued
by firms and bonds issued by firms and governments. Questions raised
are: How are the term structure of interest rates and promised coupon
payments related to bond prices? What is the influence of the expected
stream of dividends and the level of market risk of firm’s projects on
the price of shares? The financial investment decision is approached
from a portfolio perspective and ends with a discussion of the Capital
Asset Pricing Model (CAPM).

Teaching Methods

Lectures
Tutorials

Method of Assessment

Written exam – Individual assessment
(Interim) tests – Individual assessment
Mandatory attendance and in-class participation tutorials

Literature

Required reading:
1) J. Berk en P. DeMarzo, Corporate Finance, Pearson, latest
edition.
(This book is also mandatory in the elective Corporate Finance in
Emerging Economies - period 2.5).
2) Finance, Text- and Workbook, latest edition, Chapter 1-9,
11-15. This book is available through VU bookstore.

Additional (required) materials will be announced via Canvas.

Recommended background knowledge

1.1 Business Mathematics or equivalent

General Information

Course Code E_IBA2_FIN
Credits 6 EC
Period P2
Course Level 200
Language of Tuition English
Faculty School of Business and Economics
Course Coordinator dr. M.B.J. Schauten
Examiner dr. M.B.J. Schauten
Teaching Staff prof. dr. M.J. van den Assem
dr. M.B.J. Schauten

Practical Information

You need to register for this course yourself

Last-minute registration is available for this course.

Teaching Methods Study Group, Lecture
Target audiences

This course is also available as: