FINANCIAL POLICIES AND M&A STRATEGIES-1

The goal of the course is to apply fundamental principles of corporate finance to real companies and demonstrate how investors evaluate and value firms, given the adopted financial policies. The perspective is the firm value maximization: the focus is on principles that guide corporate manager decisions on financing and investing. In detail, business decisions are classified into three groups: investment, financing, and dividend decisions. At the end of the course, students will be able to fully understand and apply the process of valuation that represents the standard activity of a security analyst in a broker house.

Attending and actively participating to classes, studying the textbook and the other suggested materials, including the real cases used during the course, will allow students to:
1. Knowledge and comprehension
• acquire advanced knowledge of fundamental models of corporate finance and know how to apply them in practice, to comprehend how in reality the investment, financing and dividend decisions work.

2. Ability to apply knowledge and comprehension
• master the techniques to determine the cost of capital of firm in oder to discount the expected cash flows according to risk they embed
• identify the company optimal financial structure
• comprehend the consequences of the choices of dividend policies
• apply methods and tools acquired during the course to interpret the dynamics of corporate finance

3. Judgment ability
• evaluate the sustainability of the firm financial structure and its equilibrium
• evaluate the effects of different dividend policies that the firm may choose

The main prerequisite is a robust knowledge of financial and management accounting and basic corporate finance.

Module 1 - 1st period of classes will deal with the following topics (1 topic per week)
- Debt e firm value: the effects of corporate and personal taxation
- Debt e firm value: the effects of agency and distress costs
- Debt e firm value: the term structure of debt
- Cost of capital and structured finance solutions
- Dividend policies and firm value

Aswath Damodaran, Applied Corporate Finance: A User's Manual – 4th Edition,
ISBN-13: 978-1-118-80893-1

Supplementary study material - such as slides, papers, and exercises - will be prepared and made available on Moodle by the class's Professor.

The course grade will be based on the course project (for attendants at least 80% of classes) or by a written exam, that lasts 60 minutes, composed by three essay questions.
The grading scale (how the grades will be assigned) is the same for attending or non-attending students:
A. scores in the 18-22 range will be awarded in the presence of:
- sufficient knowledge and ability to understand applied in relation to the programme;
- sufficient ability to apply knowledge and understanding and judgment;
- sufficient communication skills, especially in relation to the use of specific language relating to the subject;
B. scores in the 23-26 range will be awarded in the presence of:
- good knowledge and ability to understand applied in relation to the programme;
- good ability to apply knowledge and understanding and judgement;
- good communication skills, especially in relation to the use of specific language relating to the subject;
C. scores in the 27-30 range will be awarded in the presence of:
- excellent knowledge and ability to understand applied in relation to the programme;
- excellent ability to apply knowledge and understanding and judgment;
- excellent communication skills, especially in relation to the use of specific language relating to the subject.

The course in mainly organized in frontal classes. Students are required to interract above normal to prepare specific project materials to be used for their assessment
All the material discussed in class will be available to students in Moodle. Classes combine fundamental principles of the subject with their practical application through exercises and real cases.
Students are required to solve case studies on topics covered in class: case studies are not mandatory but provide additional points (3pts max) to sum to the final exam mark to get the final grade.

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