Corporate finance
Associate professors Stephen Easton and Robert Faff
6 points
* One 3-hour session per week
* Second, summer semester
* Clayton, city
Objectives On completion of this subject students should have a basic understanding of the theory of finance so that it enables them to evaluate the investment, financing and dividend decisions of the firm; have a basic competence in financial mathematics; be familiar with the fundamentals of capital budgeting as applied to the investment decision; have a basic understanding of the theory of pricing of risky assets; be able to identify the basic instruments of corporate funding and have an elementary grasp of the issues underlying capital structure theory.
Synopsis The aim of this subject is to provide an introduction to corporate financial theory and the application of theory to problems relevant to financial managers. The subject will cover the following topics: corporate objectives and investor objectives; investment project evaluation; sources of finance, including financial instruments and markets; investment decisions under risk; efficient capital markets; capital structure and financing decisions including dividend policy; and the imputation system and the cost of capital.
Assessment Mid-semester test (1 hour): 20%
* Examination (3 hours):
80%
Prescribed texts
Bishop S and others Corporate finance 3rd edn, Holt Rinehart and Winston, 1993
Peirson C G and others Business finance 6th edn, McGraw-Hill, 1994
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