Dr Daniel Paravisini OLD M3.12, Dr Dong Lou OLD M3.10 and Dr Juanita Gonzalez-Uribe OLD M3.11

This course is available on the MSc in Accounting and Finance, MSc in Law and Accounting, MSc in Management and Regulation of Risk and MSc in Risk and Finance. This course is available with permission as an outside option to students on other programmes where regulations permit.

Basic Mathematics and Statistics knowledge. The course is self-contained but it covers a broad set of topics. Some prior knowledge of economics, finance and accounting is advised.

This course cannot be combined with FM429 Asset Markets A, FM431 Corporate Finance A or FM474 Finance II.

Aims to equip students with the fundamental concepts and tools underlying modern finance, both in the asset markets and the corporate finance side. Provides a foundation for subsequent courses offered by the Department. In the Michaelmas Term, the course covers asset markets and valuation. The valuation of fixed-income securities is covered first, followed by the valuation of stocks, and derivatives such as futures and options. Concepts emphasized include the present-value formula, valuation by arbitrage, portfolio theory, the CAPM, market efficiency, and binomial and Black-Scholes models. In the Lent Term, the course covers corporate finance. This part starts with capital budgeting techniques, in relation to CAPM and other valuation instruments. The course then proceeds identifying the driving forces behind capital structure decisions and choices over debt and equity finance. Special consideration is given to the tax implications of those choices, the possible costs of financial distress, the incentive implications of financial decisions and the signalling impact of those for financial market participants. A final part of the course covers some specific topics in corporate finance: dividend policy, decision to go public, mergers and acquisitions and possibly (time permitting) corporate governance issues.

20 hours of lectures and 8 hours of seminars in the MT. 20 hours of lectures and 10 hours of seminars in the LT. 4 hours of lectures and 2 hours of seminars in the ST.

40 hours of lectures in the MT and LT plus 20 classes in which problem sets, case studies and journal articles will be discussed. Students are expected to make presentations at these classes.

At least two pieces of work per term will be assessed.

J. Berk and P. DeMarzo, Corporate Finance, Pearson International Edition.

Z. Bodie, A. Kane and A. Marcus, Investments, 8th edition, McGraw Hill. ISBN:0-07-338237-X

Full details of reading will be specified in the Course Programme and Reading List which will be distributed at the first lecture.

Exam (100%, duration: 3 hours) in the main exam period.

Please note this examination is the full unit version of the exams taken on FM429 Asset Markets A (H) and FM431 Corporate Finance A (H).