Unit I: Introduction to Corporate Finance 2 hours
Significance of corporate finance; features and determinants of optimal capital structure.
Unit II: Short-term Corporate Financing 7 hours
Need for short-term financing: short-term versus long-term financing; unsecured short-term financing: accruals and deferred income, trade credit, short-term bank loan, commercial paper; secured short-term financing: inventory financing, and accounts receivable financing.
Unit III: Lease Financing 7 hours
Introduction to lease financing; forms of lease financing; evaluating lease financing in relation to debt financing: return to lessor, equilibrium annual lease payment, present value of lease alternative, present value of borrowing alternative, and other considerations.
Unit IV: Long-term Debt and Preferred Stock Financing 7 hours
Features of long-term debt financing; secured and unsecured bonds; major provisions of preferred stock issues; the use of preferred stock in financing decision; and refunding decisions on debt and preferred stock.
Unit V: Common Stock Financing 5 hours
Common stock financing: apportionment of control, income and risk; rights of holder of common stock: nature of voting rights, cumulative voting, and pre-emptive right.
Unit VI: Convertibles, Exchangeables and Warrants 5 hours
Convertible securities: conversion price and conversion ratio, conversion value and premium over conversion value, other features, financing with convertibles, forcing conversion; value of convertible securities: debt-plus-option characteristic, straight bond value, premiums, relationship among premiums; exchangeable bonds: features, use in financing, valuation of an exchangeable; warrants: features, valuation of a warrant, premium over theoretical value, and relationship between values.
Unit VII: Capital Structure Determination 7 hours
A conceptual look: net operating income approach, traditional approach; the total-value approach: arbitrage support; presence of market imperfection and incentive issues; the effect of taxes; taxes and market imperfection combined; financial signalling; and pecking order approach.
Unit VIII: International Corporate Finance 7 hours
Introduction; foreign exchange markets and exchange rates, purchasing power parity; interest rate parity; and exchange rate risk.