Students

AFIN808 – Corporate Finance

2014 – S2 Day

General Information

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Unit convenor and teaching staff Unit convenor and teaching staff Lecturer
Narelle Gordon
narelle.gordon@mq.edu.au
Contact via narelle.gordon@mq.edu.au
By appintment via email
Unit Convenor
Peter Kavalamthara
peter.kavalamthara@mq.edu.au
Contact via peter.kavalamthara@mq.edu.au
By appointment via email
Veronica Chen
veronica.chen@mq.edu.au
Credit points Credit points
4
Prerequisites Prerequisites
ACST603 or AFIN858 or admission to MCom or MIntBus or MEc or MActPrac prior to 2011
Corequisites Corequisites
Co-badged status Co-badged status
Unit description Unit description
The objective of this unit is to explore the theory and application of corporate finance issues at an advanced level, and to equip students with the required depth of knowledge and skill expected of a professional.
Following a brief revision of basic financial concepts covered in earlier finance courses, the unit investigates the more complicated theoretical issues and analytical techniques in corporate finance. In particular, a critical approach is adopted which involves identifying the assumptions and limitations of these techniques when applied to the real world. Students are encouraged to understand that often the best method is a matter of debate, and that they must choose a method from a group of methods all of which have various limitations. This critical approach is reinforced by examining a number of real life corporate finance projects.

Important Academic Dates

Information about important academic dates including deadlines for withdrawing from units are available at https://www.mq.edu.au/study/calendar-of-dates

Learning Outcomes

On successful completion of this unit, you will be able to:

  • To understand basic investment and finance concepts.
  • To be competent in applying capital budgeting techniques.
  • To understand the role of the risk-return relationship and market efficiency.
  • To have a good understanding of the effects of leverage and of capital structure theory.
  • To be able to understand the value of flexibility and a real options approach.
  • To be able to analyse the effects of different corporate shapes, including mergers and project financing.

General Assessment Information

Scaling: A Standardised Numerical Grade (SNG) gives you an indication of how you have performed within the band for your descriptive grade. The SNG is not a mark, and you may not be able to work it out based on your raw examination and other assessment marks. Nor are you able to determine you are “one mark away” from a different grade.

Gradebook: It is the responsibility of students to view their marks for each within session assessment on iLearn within 20 working days of posting. If there are any discrepancies, students must contact the unit convenor immediately. Failure to do so will mean that queries received after the release of final results regarding assessment marks (not including the final exam mark) will not be addressed.”

Assessment Tasks

Name Weighting Due
Assessed Coursework 10% Random weeks
Presentation 15% Allocated week
Class Test 20% Week 8
Final Exam 55% See Exam Timetable

Assessed Coursework

Due: Random weeks
Weighting: 10%

Each collection is worth a maximum of 5%. There will be two random collections during the semester. To get full marks students need to add some insight to the standard solution. Students who copy the text-book solution word for word will receive 0 marks.

No extensions will be granted.  Students who have not submitted the task prior to the deadline will be awarded a mark of 0 for the task, except for cases in which an application for special consideration is made and approved 
On successful completion you will be able to:
  • To understand basic investment and finance concepts.
  • To be competent in applying capital budgeting techniques.
  • To understand the role of the risk-return relationship and market efficiency.
  • To have a good understanding of the effects of leverage and of capital structure theory.
  • To be able to understand the value of flexibility and a real options approach.
  • To be able to analyse the effects of different corporate shapes, including mergers and project financing.

Presentation

Due: Allocated week
Weighting: 15%

Students will be formed into groups.  Each group will be allocated a topic on a key concept or an application of finance. The group will research the topic, prepare a report and present it to the class in 20 minutes (including 5 minutes for discussions) in their allocated week.  The report will be a combination of notes and presentation slides.  It will be submitted through Turnitin and a hard-copy will be handed-in to the lecturer in the allocated week. The presentation will be graded based on content and delivery.  Depth of research, relevance of contents to the topic, organisation of ideas and students' ability to give the audience insights - to engage, inspire, persuade, and energise the audience. Every student must participate in the group presentations and report so that individual student contribution to the group presentations and report can be identified.  Each member of a group will be required to complete an assessment of the contributions of individual members.

No extensions will be granted. Students who have not submitted the task prior to the deadline will be awarded a mark of 0 for the task, except for cases in which an application for special consideration is made and approved.
On successful completion you will be able to:
  • To understand basic investment and finance concepts.
  • To be competent in applying capital budgeting techniques.
  • To understand the role of the risk-return relationship and market efficiency.
  • To have a good understanding of the effects of leverage and of capital structure theory.
  • To be able to understand the value of flexibility and a real options approach.
  • To be able to analyse the effects of different corporate shapes, including mergers and project financing.

Class Test

Due: Week 8
Weighting: 20%

A 1-hour in-class test will be conducted in the week 8 class.  Please present yourself at the enrolled time and place of your lecture. The test will contain both theoretical and calculation questions in the multiple choice format and it will help you to monitor your progress in accomplishing learning outcomes 1, 2 and 3.  

No extensions will be granted.  Students who have not attended the test will be awarded a mark of 0 for the task, except for cases in which an application for special consideration is made and approved.
On successful completion you will be able to:
  • To understand basic investment and finance concepts.
  • To be competent in applying capital budgeting techniques.
  • To understand the role of the risk-return relationship and market efficiency.

Final Exam

Due: See Exam Timetable
Weighting: 55%

To be eligible to pass this unit, a pass is required in the the final exam.

The content of the final exam will give greater weight to topics covered later in the course (that is, topics not covered by the class test). 

 
On successful completion you will be able to:
  • To understand basic investment and finance concepts.
  • To be competent in applying capital budgeting techniques.
  • To understand the role of the risk-return relationship and market efficiency.
  • To have a good understanding of the effects of leverage and of capital structure theory.
  • To be able to understand the value of flexibility and a real options approach.
  • To be able to analyse the effects of different corporate shapes, including mergers and project financing.

Delivery and Resources

CLASSES                                                                                                                                                                                         

The Unit involves 3 hours face-to-face teaching per week consisting of a 3 hour seminar.The timetable for classes can be found on the University website at:

http://www.timetables.mq.edu.au/

There will be thirteen lectures conducted in the following classes:

Tue    Room E6A 133, 3pm to 6pm

          Lecturer: Narelle Gordon

Fri      Room W5C 220, 1pm to 4pm

          Lecturer: Peter John

Fri      Room E6A 133, 6pm to 9pm

          Lecturer: Peter John

Attendance at seminars is a compulsory component of the Unit, and students are expected to attend all classes. If a student misses more than 2 classes then they could be given a written warning that non- attendance can lead to a Fail grade. Further absence at classes can trigger a recommendation of a Fail grade in the Unit.

REQUIRED AND RECOMMENDED TEXTS AND/OR MATERIALS                                                                   

Prescribed

Brealey, Myers and Allen, Principles of Corporate Finance, 11th Edition, McGraw Hill Irwin.

The prescribed text can be purchased from the Macquarie University Co-op Bookshop.

UNIT WEB PAGE

The unit Website is only available to students enrolled in AFIN808.  It will be available from Monday 3 March.Students will be able to access the unit web page by the use of their normal university user/password details. Please contact the IT Help Desk if you have any difficulties accessing the unit web page:

             Phone:(02)9850HELP(4357) Option1 or Freecall:1800063191

             FacetoFace: ITHelpDesk, C5C244

              24/7Email:help@mq.edu.au

 The Website will contain important unit materials, including:

·         Course details — An outline of the unit, including assessment tasks

·         Announcements—notices updating students on important matters regarding the unit.

·         Assignment

·         Suggested answers and solutions to homework questions

·         Results — for assignment and other assessable material.

LEARNING AND TEACHING ACTIVITIES

This is meant to be a 2nd unit in corporate finance. Most students will have completed an introductory financial management / corporate finance unit. As a more advanced unit, some of the topics covered will be familiar to students but we will be covering them at a more in - depth level. Some other topics will be completely new. As in the introductory unit, students need to work through the quantitative and other problems which are selected each week from the text. However, an important objective of this unit is to make the student aware of the limitations of financial theory and of the assumptions made in making finance and investment decisions.

TECHNOLOGY USED AND REQUIRED 

The Text book provides access to various on-line resources. Further, a number of the class exercises are designed to be completed using excel.  Students are encouraged to use excel when attempting these exercises.

CHANGES TO THE UNIT SINCE LAST SEMESTER

There are no major changes to the topics.

Unit Schedule

 
Week

Week Beg 

  Topics

Brealey-Myers Chapters 

 Problems 
1 Aug 4  The Scope of Corporate Finance   1, 33, 2

 1: 7,11 / 33: 6,10,11/  2:14,16,30,32,36
2 Aug 11  Valuation and Capital Budgeting  3, 4, 5, 6

 3:1,12,32 / 4:24,27 / 5:11 / 6:8,24
3 Aug 18  Risk and Return  7, 8, 9  7: 6,14/ 8:5,8,21/9:11,13,19
4 Aug 25  Market Efficiency  11, 13  11:4,8,18 /13:8,17,19
5 Sep 1  Capital Structure 17, 18, 19  17:12,13,22,24 / 18:5,22,26/ 19:8,17,19
6 Sep 8  Equity and Signalling 14, 15, 16  15:7,14,17 / 16:21,23,30
7 Sep 15

 Debt and Information Assymetry

 23, 24  23:1,4,14 / 24:7,14,20,23
    SEMESTER BREAK    
 8 Oct 7

 Corporate Restructurig and Private Equity

IN-CLASS TEST 

32

32:13,15,16
9 Oct 13  Uncertainty in Capital Budgeting  10, 20  10:9,18,22/20:4,15,23,27
10 Oct 20  Real Options  21, JP Ch. 22*  21:5,11,18 /JP Ch. 22*:2,5a,b,c,6,10, 13,14,16
11 Oct 27  Mergers and Acquisitions 31, 32   31:2,3,6,9,12 32: 12,17
12 Nov 3  Project & Infrastructure Financing  Reading on the iLearn TBA
13 Nov 10  Revision    

*JP Ch. 22 – Jonathan Berk, Peter DeMarzo (2013), Corporate finance, 3e, Pearson Global Edition. 

Policies and Procedures

Macquarie University policies and procedures are accessible from Policy Central. Students should be aware of the following policies in particular with regard to Learning and Teaching:

Academic Honesty Policy http://mq.edu.au/policy/docs/academic_honesty/policy.html

Assessment Policy  http://mq.edu.au/policy/docs/assessment/policy.html

Grading Policy http://mq.edu.au/policy/docs/grading/policy.html

Grade Appeal Policy http://mq.edu.au/policy/docs/gradeappeal/policy.html

Grievance Management Policy http://mq.edu.au/policy/docs/grievance_management/policy.html

Disruption to Studies Policy http://www.mq.edu.au/policy/docs/disruption_studies/policy.html The Disruption to Studies Policy is effective from March 3 2014 and replaces the Special Consideration Policy.

In addition, a number of other policies can be found in the Learning and Teaching Category of Policy Central.

Student Code of Conduct

Macquarie University students have a responsibility to be familiar with the Student Code of Conduct: https://students.mq.edu.au/support/student_conduct/

Supplementary Exams

Further information regarding supplementary exams, including dates, is available here

http://www.businessandeconomics.mq.edu.au/current_students/undergraduate/how_do_i/special_consideration

Student Support

Macquarie University provides a range of support services for students. For details, visit http://students.mq.edu.au/support/

Learning Skills

Learning Skills (mq.edu.au/learningskills) provides academic writing resources and study strategies to improve your marks and take control of your study.

Student Services and Support

Students with a disability are encouraged to contact the Disability Service who can provide appropriate help with any issues that arise during their studies.

Student Enquiries

For all student enquiries, visit Student Connect at ask.mq.edu.au

IT Help

For help with University computer systems and technology, visit http://informatics.mq.edu.au/help/. 

When using the University's IT, you must adhere to the Acceptable Use Policy. The policy applies to all who connect to the MQ network including students.

Graduate Capabilities

PG - Discipline Knowledge and Skills

Our postgraduates will be able to demonstrate a significantly enhanced depth and breadth of knowledge, scholarly understanding, and specific subject content knowledge in their chosen fields.

This graduate capability is supported by:

Learning outcomes

  • To understand basic investment and finance concepts.
  • To be competent in applying capital budgeting techniques.
  • To understand the role of the risk-return relationship and market efficiency.
  • To have a good understanding of the effects of leverage and of capital structure theory.
  • To be able to understand the value of flexibility and a real options approach.
  • To be able to analyse the effects of different corporate shapes, including mergers and project financing.

Assessment tasks

  • Assessed Coursework
  • Class Test
  • Final Exam

PG - Research and Problem Solving Capability

Our postgraduates will be capable of systematic enquiry; able to use research skills to create new knowledge that can be applied to real world issues, or contribute to a field of study or practice to enhance society. They will be capable of creative questioning, problem finding and problem solving.

This graduate capability is supported by:

Learning outcomes

  • To understand basic investment and finance concepts.
  • To be competent in applying capital budgeting techniques.
  • To understand the role of the risk-return relationship and market efficiency.
  • To have a good understanding of the effects of leverage and of capital structure theory.
  • To be able to understand the value of flexibility and a real options approach.
  • To be able to analyse the effects of different corporate shapes, including mergers and project financing.

Assessment tasks

  • Assessed Coursework
  • Presentation
  • Class Test
  • Final Exam

PG - Effective Communication

Our postgraduates will be able to communicate effectively and convey their views to different social, cultural, and professional audiences. They will be able to use a variety of technologically supported media to communicate with empathy using a range of written, spoken or visual formats.

This graduate capability is supported by:

Learning outcomes

  • To understand the role of the risk-return relationship and market efficiency.
  • To have a good understanding of the effects of leverage and of capital structure theory.
  • To be able to understand the value of flexibility and a real options approach.
  • To be able to analyse the effects of different corporate shapes, including mergers and project financing.

Assessment task

  • Presentation

Research and Practice

Research and Practice

  • This unit uses research from external sources (references)
  • This unit gives you practice in applying research findings in your assessments.
  • This unit gives you an opportunity to learn software used in industry.

There is a close relationship between theory and practice in corporate finance. Every day the media is filled with events relevant to corporate finance. Students should constantly be looking for examples of the theory from a topic, as reflected in a media story.

Changes since First Published

Date Description
03/08/2014 In assessment a typing error relating to due date of class test at one place is corrected to week 8.
31/07/2014 Added details of a third class opened recently.
28/02/2014 The Description was updated.