OPF:FINBPBFA Business Finance - Course Information

FINBPBFA Business Finance

Extent and Intensity

2/1/0. 5 credit(s). Type of Completion: zk (examination).

Teacher(s)

prof. Ing. Daniel Stavárek, Ph.D. (lecturer)
Ing. Pavlína Haltofová, Ph.D. (seminar tutor)

Guaranteed by

prof. Ing. Daniel Stavárek, Ph.D.
Department of Finance and Accounting – School of Business Administration in Karvina

Prerequisites

The completion of the course requires completion of the course BPFIN.

Course Enrolment Limitations

The course is also offered to the students of the fields other than those the course is directly associated with.

fields of study / plans the course is directly associated with

• Finanční management (programme OPF, B_EKOMAN)

Course objectives

The aim of the course is to provide students with essential knowledge in corporate finance. The students will gradually get acquainted with principles of financial management, investment decision and project valuation, measuring risk of investments, short-term and long-term financing. The attention will be paid on foundations of dividend policy.

Syllabus

• 1. Introduction to the business finance
  2. Alternative theories of corporation
  3. Agency conflict
  4. Present and future value of cash flows
  5. Capital budgeting methods (NPV, IRR)
  6. Capital budgeting methods (PI, PBP)
  7. Corporate financing (long-term)
  8. Corporate financing (short-term)
  9. Capital structure
  10. Risk of simple investment
  11. Risk of portfolio investment
  12. Dividend policy
  13. Special forms of cash flows
  1. Introduction to the business finance
  Fundamental terms. Development of corporate finance. Form of business according to organization. Origin and development of corporation. Corporate finance and financial management. Corporate finance in market economy.
  2. Alternative theories of corporation
  Goal of the corporation. Managerial theories - simple managerial model, Baumol model, Williamson model, Marris model. Behavioristic theories. Employee's theories.
  3. Agency conflict
  Types of agency conflicts, agency costs, managerial compensation. Information asymmetry. Corporate governance models - Anglo-American model, Continental-European model.
  4. Present and future value of cash flows
  Opportunity costs. Time value of money. Simple present and future value. Other forms of compounding. Real value of cash flows.
  5. Capital budgeting methods
  Valuation criteria. Return, risk, liquidity. Net present value. Internal rate of return. Average accounting return. Advantages and disadvantages of methods. Valuation of independent and mutually exclusive projects.
  6. Capital budgeting methods
  Payback period. Average accounting return. Advantages and disadvantages of methods. Valuation criteria. Valuation of independent and mutually exclusive projects.
  7. Corporate financing (long-term)
  Characteristics, advantages and disadvantages of internal and external, long-term financing. Corporate financing in practice. Equity and debt securities.
  8. Corporate financing (short-term)
  Characteristics, advantages and disadvantages of internal and external short-term financing. Corporate financing in practice. Equity and debt securities.
  9. Capital structure
  Searching for optimal capital structure. Theoretical basis. Costs of capital. Costs of equity and debt financing. Financial leverage. Financial risk.
  10. Risk of simple investment
  Risk as a part of economy. Risk versus uncertainty. How to determine the probability. Risk of simple investment.
  11. Risk of portfolio
  Risk of portfolio of two assets. Unique risk and market risk. Correlation coefficient and its use for investment valuation.
  12. Dividend policy
  Types of dividends. Definition of dividend. Dividends according to shares, forms of dividend, interval of paying. How to pay dividends in the Czech Republic and in the world. Share repurchase as an alternative of dividend policy.
  13. Special forms of cash flows
  Present and future value of cash flows. Special forms of cash flows - annuity, growing annuity, perpetuity, growing perpetuity.

Literature

required literature
• WATSON, D., HEAD, A. I. Corporate Finance. Priniples & Practice. Prentice Hall, 2007. ISBN 13: 978-0-273-706. info
• ROSS, SR., WESTERFIELD, RW., JORDAN, BD. Fundamentals of Corporate Finance (7th Edition). Boston: McGraw-Hill, 2006. ISBN 0-07-319262-7. info
• BREALEY, A., MYERS, SC., ALLEN, F. Corporate Finance. Boston: McGraw-Hill, 2005. ISBN 0-07-111795-4. info

recommended literature
• Various readings from The Economist, The Euro and other financial magazines. info
• BLOCK, SB., GEOFFREY, GA. Foundations of Financial Management. Boston: McGraw-Hill, 2005. ISBN 0-07-284229-6. info
• MADURA, J. International Corporate Finance. New York: Thompson South-Western, 2005. ISBN 0-32-432382-4. info
• BURKLEY, A., ROSS, SA., WESTERFIELD, RW., JAFFE, JF. Corporate Finance Europe. Cambridge: McGraw-Hill, 2004. ISBN 0-256-13473-1. info

Teaching methods

Skills demonstration
Seminar classes

Assessment methods

Written exam

Language of instruction

English

Further comments (probably available only in Czech)

The course can also be completed outside the examination period.

Teacher's information

Compulsory attendance at seminars 25 %.
Seminar paper, seminar discussions, ongoing test, final exam (written)

Activity	Difficulty [h]
Ostatní studijní zátěž	66
Přednáška	26
Seminář	13
Zkouška	40
Summary	145

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