Course
Advanced Finance (2022-2023)
Code / Version
FIN74000 (101)
Total Hours
56
Credits
4
PreRequisite(s)
FIN72000 (100) Finance*** or FIN72000 (101) Finance
CoRequisite(s)
Course Description
This advanced course is a continuation of the Finance course and provides an in-depth study of issues and tools that will assist financial managers in making decisions. Topics include capital budgeting under uncertainty; long-term sources of funds; financial leverage; capital structure; financing options; dividend policy; business valuations; mergers and acquisitions; investment decisions; futures, forwards, options, and swaps; risk management (foreign exchange and interest rate); financial planning; leasing; as well as long-term planning and strategic issues in finance.
PLAR Eligible
Yes
Eligible for Supplemental
Yes (See eligibility requirements in the program handbook)
Resources
- eText Program | eText | Textbook and Connect Access Code | Ross (CDN). Corporate Finance (9th). McGraw Hill Education.
- Supplies | Course-approved calculator | Texas Instruments BAII PLUS |
Program Outcomes Supported
Course Outcomes
Successful completion of this course will enable the student to:
- Determine the appropriate capital structure for corporate investments in new projects.
- Calculate a weighted average cost of capital to be used in a capital budgeting decision.
- Choose appropriate investments in capital assets using capital budgeting under uncertainty.
- Prioritize actions for the following decisions in a corporation: lease or buy a capital asset; leveraged buyout; mergers and acquisition; international trade financing; risk (interest rate, foreign exchange, and commodity risk); bonds refinancing; preferred share refinancing.
- Evaluate when corporations should use the following as long-term sources of funds; bonds; preferred shares; common shares; rights offering.
- Choose dividend policy, including when to issue stock dividends and stock splits for a corporation.
- Distinguish between futures, forwards, options and swaps.
- Outline a short-term or a long-term financing plan for a corporation.
- Discuss how finance is different for a multinational company.
- Discuss how ethics apply to business situations.
Unit Outcomes
Successful completion of the following units will enable the student to:
1.0 Financial Data Visualization and Contemporary Issues in Corporate Finance
1.1 Explain dimensions of information quality – relevance, ease of use, integrity, timeliness for corporate financial decision making
1.2 Discuss presentation of information for decision making in corporate finance.
1.2.1 Discuss data visualization of financial and non-financial data in corporate financial decision making.
1.2.2 Identify dashboard, graphs, tables, report design in corporate financial decision making.
1.2.3 Discuss communication of information for quality decision making in corporate financial decision making.
1.3 Discuss contemporary issues in corporate finance (for example, Systems Thinking)
2.0 Capital Budgeting
2.1 Evaluate the risk of a portfolio by calculating the correlation between the returns of two assets.
2.2 Identify the efficient set of portfolios.
2.3 Identify how systematic risk is applied in the capital asset pricing model.
2.4 Evaluate projects by using systematic risk, total risk analysis and capital rationing.
2.5 Illustrate the steps in capital budgeting.
3.0 Sources of Long Term Funds
3.1 Explain the following regarding long-term debt:
3.1.1 key features.
3.1.2 tax implications.
3.1.3 rights and risks.
3.1.4 types including notes, debentures and bonds.
3.2 Evaluate bank financing alternatives.
3.3 Evaluate bond offerings according to their features and provisions.
3.4 Discuss the different types and features of preferred shares.
3.5 Evaluate whether a firm should refinance a bond issue and a preferred share issue.
3.6 Identify the rights of common share owners, including voting rights for directors.
3.7 Compare and contrast private and public share issues.
3.8 Evaluate the use of rights to raise capital and the effect of issuing rights on shareholder wealth.
4.0 Capital Structure
4.1 Identify the risk to common shareholders of using debt financing.
4.2 Discuss capital structure theory in perfect capital markets in the absence of taxes.
4.3 Evaluate the impact of corporate taxes on the value of a levered firm and its WACC.
4.4 Evaluate the impact of personal taxes on the value of the unlevered firm and the levered firm.
4.5 Demonstrate the effect of bankruptcy costs on the value of a firm and the optimal degree of financial leverage.
4.6 Identify other factors that limit the amount of debt financing.
4.7 Identify the major influences on capital structure, including the leverage-indifference EBIT, industry averages, debt ratings, and other factors.
5.0 Valuation and Capital Budgeting for the Levered Firm
5.1 Identify project financing arrangements.
5.2 Evaluate projects using the adjusted present value and weighted average cost of capital methods.
5.3 Explain the various methods that are appropriate to value a tangible and an intangible asset.
5.4 Discuss an appropriate course of action for project financing, considering the
entity’s objectives
5.5 Explain the various methods that are appropriate to value a business.
6.0 Dividend and Other Payouts
6.1 Evaluate dividend policy in perfect markets.
6.2 Evaluate the effect of transaction and floatation costs, tax differential effects, signaling, and clienteles on dividend policy.
6.3 Demonstrate the factors that affect dividend policy.
6.4 Evaluate how stability and industry norms affect a firm’s dividend policy.
6.5 Demonstrate the different dividend policies.
6.6 Illustrate the relationship among stock dividends, stock splits, and dividend policy.
6.7 Discuss how share repurchases can serve as substitutes to cash dividends under perfect market conditions.
7.0 Leasing
7.1 Demonstrate the different types of leases.
7.2 Recommend whether a firm should lease or buy capital assets.
8.0 Treasury Risk Management
8.1 Evaluate investment strategies according to the following types of interest rate risk:
8.1.1 single transaction risk.
8.1.2 income risk.
8.1.3 capital risk.
8.2 Identify how foreign exchange risk and commodity price risk affects profitability.
8.3 Evaluate interest rate using gap analysis.
8.4 Evaluate risk using scenario analysis.
8.5 Explain the approaches to risk management.
9.0 Options and Corporate Finance
9.1 Identify the characteristics of options and options markets.
9.2 Identify the expectations and choices in basic option trading strategies.
9.3 Identify the differences between options and futures/forwards.
9.4 Identify the factors in option pricing.
9.5 Evaluate hedging strategies to minimize financial risk with options on futures.
9.6 Explain the option features associated with some corporate securities.
10.0 Derivatives and Hedging Risk
10.1 Identify the characteristics of futures and forward contracts.
10.2 Evaluate the price of a future contract.
10.3 Identify the characteristics of currency swaps.
10.4 Explain how to minimize financial risk using interest rate swaps and hedging using currency and interest rates swaps.
10.5 Evaluate what impact ethical issues that arise in the derivatives market have on trading and outcomes.
10.6 Identify the costs of hedging.
11.0 Financial Planning
11.1 Explain financial proposals and financing plans and the importance
for the entity
11.2 Discuss the objectives, components, and steps in corporate financial planning.
11.3 Discuss forecasting inputs into the financial planning model and identify potential data quality issues.
11.4 Evaluate a firm’s outlook through its pro forma income statement, balance sheet, and cash flow statement.
11.5 Discuss the differences between financial management for small versus large organizations.
11.6 Evaluate a firm’s short-term and long-term financing decisions.
11.7 Evaluate a firm’s strengths and weaknesses using ratio analysis.
11.8 Evaluate a firm’s growth strategy using a financial planning model.
11.9 Explain indicators of financial difficulty for an entity.
11.10 Discuss interpretation and professional skepticism of financial planning models and analytics.
11.11 Evaluate the ethical issues that may arise from strategic decisions.
12.0 Mergers and Acquisitions
12.1 Evaluate proposed merger and acquisition targets using basic methods.
12.2 Discuss sources of acquisition synergy.
12.3 Calculate business worth using net book value, net realizable value, earning multiples, and net present value.
12.4 Discuss various defensive strategies against takeovers.
13.0 International Corporate Finance
13.1 Discuss what role the following affect a multinational company:
13.1.1 trade agreements
13.1.2 international trade theory
13.1.3 business forms
13.1.4 taxes
13.1.5 financial markets
13.2 Discuss the following items:
13.2.1 foreign exchange markets and exchange rates
13.2.2 purchasing power and interest rate parities
13.2.3 exchange rate risks
13.2.4 political and economic risks
13.2.5 exporting and importing
13.3 Discuss factors that influence long-term investments for a multinational company.
Evaluation
The minimum passing grade for this course is 60 (C).
In order to successfully complete this course, the student is required to meet the following evaluation criteria:
In order to successfully complete this course, the student is required to meet the following evaluation criteria:
Description
Quantity
Percentage
1. Assignment(s)
20.00
%
2. Group Project
40.00
%
3. Final Exam
40.00
%
100.00
%
Web-based Tools
- This course may be using web-based services with data centres outside of Canada. Students may be expected to complete assessments where information is transmitted outside of Canada. Students who do not wish to submit their information to other countries have the right to opt-out. It is the responsibility of the student to notify the instructor in the first week of term if they have any concerns. The alternative may require the student to attend the campus testing centre at a designated time.
Notes
Software to Detect Academic Offences: Software may be used to screen assignments or invigilate exams in this course. It is the responsibility of the professor to notify students of any such technologies in advance of their use. It is the responsibility of the student to notify the professor if they, at the time assignment details are provided, wish to opt-out and be provided with an alternate process.
Academic integrity is expected and required of all Conestoga students. It is a student's responsibility to maintain compliance with Conestoga's Academic Integrity Policy at all times.
Conestoga College is committed to providing academic accommodations for students with documented disabilities.
An Instructional Plan will be available at the beginning of the course and will be referred to in conjunction with this course outline.
Academic integrity is expected and required of all Conestoga students. It is a student's responsibility to maintain compliance with Conestoga's Academic Integrity Policy at all times.
Conestoga College is committed to providing academic accommodations for students with documented disabilities.
An Instructional Plan will be available at the beginning of the course and will be referred to in conjunction with this course outline.
Prepared By
Anna Czegledi, CPA, CGA, Ph.D.
School
Business
Date
2022-05-24
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