Corporate finance

Lecturer:

Prof. Jens Jackwerth

Teaching Assistants:                                             

Natascha Jankowski

Patrick Deufel

Contact the CF team: cf.jackwerth@uni-konstanz.de

Examination: Final exam (no midterm)

All course materials available via Ilias

Helpful and worth knowing

The lecture requires the following statistical basics:

Statistical Basics in German 
 
Statistical Basics in English

Vocabulary for the lectures

English-German

German-English

The Sprachlehrinstitut offers various English courses, such as "English for Economists". Visiting one of these courses is recommended to all students.

Content

Content

Introduction: The objective of this course is to develop a framework for financing decisions and to provide a solid foundation for understanding practical and theoretical questions concerning corporate finance. The following main topics will be discussed:

Valuation of projects: We discuss the analysis of investment projects, the influence of risks, taxes, and inflation, the interest rate structure, and the required return on capital.

Capital markets: Movements of capital in the markets are described, the role of intermediaries, sources of finance, the borrowing decision, company valuation, and optimal portfolio composition.

Capital structure: The optimal capital structure of companies is discussed, as well as mergers and acquisitions, the market for corporate control, market efficiency, and leverage.

Books and Reading

You can find the most of the recommend books in my Semesterapparat or the library.

 The required statistical basics are available in the book:
"Statistik: der Weg zur Datenanalyse", Ludwig Fahrmeir. 7. Auflage, 2010.

The reference books for accounting are:
"Internationale Rechnungslegung", Bernhard Pellens/Fülbier/Gassen/Sellhorn. 9. Auflage, 2014.

"Jahresabschluss und Jahresabschlussanalyse", Adolf G Coenenberg,/Haller/ Schulte. 21. Auflage, 2009.

The text for this course is:
"Principles of Corporate Finance”, Brealey and Myers. The 11th edition is on the market (Brealey, Myers, and Allen), ca. 63.00 EUR. ISBN 978-0-07-715156-0.

For additional practice questions and examples you can use:
"Study Guide for Principles of Corporate Finance", 10th edition, by V. Sivaraman Krishnan, McGraw Hill 2011. ISBN 978-0-07-731647-1.

For a better understanding, I can recommend the following books: Reading the "Wall Street Journal Guide to Understanding Money and Investment" is a painless way of learning about financial markets (although somewhat specific to the US). There are a number of fairly interesting "bedtime reading" paperbacks, e.g. "Barbarians at the Gate", "Liar's Poker", and "A Random Walk Down Wall Street", which give some insight into aspects of the financial world.

For students who need a German book for a better understanding, I recommend:
"Grundlagen der Finanzwirtschaft”, Jonathan Berk/Peter DeMarzo, Pearson 2011, ISBN 978-3-86894-075-6 ca. 49.00 EUR.

A good economics dictionary is:
"Wirtschaftswörterbuch German-English; English-German", Wilhelm Schäfer. The price per book is 39.00 EUR - the price for the complete edition is 49.00 EUR.

A good online dictionary is Leo.

Assessment

I will provide the lecture notes and old exams as pdf-files on my website. In addition, a video stream will be available on the internet.

The range of prior knowledge within the class is wide. For participants who have prior knowledge, the first few weeks will be somewhat repetitive. We will cover a number of practice questions from the Brealey and Myers book in class. Also, you should try the quizzes and other problems at the end of each chapter in the text. It is also essential to do the preparation ahead of time.

Final Exam

The final exam is mandatory for the successful completion of this course. The exam is composed of four questions. The first question, which is mandatory for everyone, consists of four true-or-false statements. Here, you have to justify your answer in two or three sentences. The remaining three question, of which you only need to answer two, are similar to the exercises calculated in the tutorials. You can achieve up to 90 points in the exam. You need to achieve at least 45 points to pass. Permitted aids are a handheld calculator and one A4 sheet (both sides may have notes; the sheet must be handed in).

For a handheld calculator, you are not allowed programmable calculators I would use the cheapest Casio-FX, e.g. the Casio FX-82SX for EUR 10. More expensive ones have more complicated functions, which we do not need. You can also get the more expensive HP 10bII+ financial calculator (EUR 40), but it will not help on the exam any more than the Casio.

Other rules of the game you will receive when we meet in October. In the meantime I wish you a great summer.

All the best,

Jens Jackwerth