Corporat Finance I

In order to maximise student participation in class and in the learning process, the classes include the following teaching-learning methodologies:

(i) expository, to present the theoretical frameworks of reference;

(ii) participatory, with analysis and resolution of practical exercises;

(iii) active, with individual work.

In order to increase student involvement with the course and self-study, the flipped classroom method will be used in some subjects, such as capital structure selection and profit distribution policy. To the same end, students will be given group assignments.

The learning objectives (LO) are:

LO1. Analyze the main determinants of the exchange rate and the equilibrium relationships in the international exchange and interest rate markets;

LO2. Explain the different currency risk hedging strategies;

LO3 – Explain the main motivations behind mergers and acquisitions (M&A);

LO4 – Explain the relationship between motivations and types of mergers and acquisitions;

LO5 – Compare the characteristics of a merger or acquisition through the form of acquisition, method of payment and behavior of the managers of the acquired company;

LO6 – Explain the common reasons for restructuring;

LO7. Know the rationale behind the different theories associated with capital structure selection;

LO8. Know the theories and factors that shape the distribution of results;

At the end of the course, students should have developed the following skills:

. Select foreign exchange risk management strategies;

. Identify the sources of value creation in M&A operations;

. Recognize the common reasons for restructuring;

. The ability to intervene in the definition of profit distribution policies and the selection of financing sources.

1 – Foreign exchange operations

1.1 Nominal and real exchange rates

1.2 How the spot and forward markets work

1.3 Formation of forward rates

1.4 Theory of efficient markets

2 – Foreign Exchange Risk Management

2.1 Internal Currency Hedging Techniques

2.1.1 Choice of invoicing currency

2.1.2 Discounts for early payment or receipt

2.1.3 External financing in anticipation of export revenues

2.1.4 Diversification of currencies

2.2 External Exchange Risk Hedging Techniques

2.2.1 Futures contracts

2.2.2 Currency forwards

2.2.3 Swaps contracts

3 – Derivatives in the Foreign Exchange Market

3.1 Currency Options

4 – Mergers and Acquisitions and Corporate Restructuring

4.1 Categories of M&A and their Motivations

4.2 Sources of Value Creation and M&A Theories

4.3 Corporate restructuring strategies

4.4 Spin-offs, split-ups and split-offs

4.5 Equity carve-outs

5 – Capital Structure

5.1 Explanatory theories

6 – Profit distribution

Assessment will be carried out using one of the following methods:

1. The assessment will be carried out through a final exam, and students who obtain a mark of 10 or more will pass.

2. Mixed assessment, consisting of a final exam and a written assignment (groups of 3 students). This assessment system requires students to attend at least 80 per cent of classes. Students can choose between the following assignments:

a. Establish contact with an exporting company exposed to exchange rate risk. The aim is to ascertain the exchange rate risk hedging strategies adopted by the company and, in dialogue with the managers, reflect on the possible opportunity to adopt new ways of minimising exchange rate risks;

b. Critical evaluation of a set of articles published in the last 5 years and related to the policy of distributing profits or selecting the capital structure;

c. Critical evaluation of a set of articles related to M&A operations.

The final classification (CF) is obtained by applying the following formula: FC = 0.60 * Exam + 0.40 * Paper. In the case of a mark ≥ 9.5, the student passes.