BUSINESS SCHOOL

Unit of Study Outline

Unit Code FINC2012
Unit Title Corporate Finance II
Semester 1, 2015
Pre-requisite Units: FINC2011 or FINC2001
Co-requisite Units:
Prohibited Units: FINC2002
Assumed Knowledge and/or Skills: You are assumed to be familiar with all content covered in Corporate
Finance I, particularly financial mathematics.
Unit Coordinator: Dr Hui Zheng
Address: Room 443, The Business School Building(H69), Darlington NSW 2008
Email: [email protected] Phone: 9351 6448
Consultation Hours: Hui Zheng: Thursday 2:30 - 3:30 Tutors: Please go to Blackboard for details.
Class Day(s): Thursday 16:00-18:00 Bosch Lecture Theatre 3
Required Text / Resources:
Required Textbook: Brealey R., Myers, S., Allen, F. 2014, Principles of Corporate Finance, 11th Edition, McGraw
Hill.
Copies of the text are readily available in the library.

Supplemenatry Textbook: Brealey R., S. Myers, G. Partington, and D.Robinson, Principles of Corporate Finance,
Australian edition, McGraw-Hill 2000.
Copies of the text are readily available in the library. Students are not recommended to own this textbook since we
will only use some chapters of this book.
More details about these textbooks will be explained in class.

You may also find the following resources useful throughout the course:
- Bishop S. R., H. R. Crapp, R. W. Faff & G. J. Twite, Corporate Finance, 4th Edition, Prentice Hall, 2000.
- Ross, Westerfield, Jaffe, Corporate Finance, 6th Edition, McGraw Hill, 2002.
- Hull, Options, Futures and Other Derivatives, 7th Edition, Pearson Prentice Hall, 2009.

This unit of study outline MUST be read in conjunction with

The Business School Unit of Study Common Policy and implementation information that applies to every unit of study offered by the
Business School (http://sydney.edu.au/business/currentstudents/policy). All assessment rules, such as standards used, penalties etc, are
covered.
The Business School Student Administration Manual - for information about all processes such as illness, appeals etc (
http://sydney.edu.au/business/currentstudents/student_information/student_administration_manual) When deciding applications and
appeals relating to these matters it will be assumed that every student has taken the time to familiarise themselves with these key policies
and procedures.

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The Business School seeks feedback from students and staff in order to continually improve all units offered. For information on previously
collected feedback and innovations made in response to this feedback, please see
http://sydney.edu.au/business/learning/planning_and_quality/feedback/student

1. Unit of Study Information

This unit builds on FINC2011 Corporate Finance I, by extending basic concepts in corporate financing, investing
and risk management. The unit presents current theories of corporate financing and their practical application in
corporate investment and capital budgeting. The unit also examines securities and securities markets with an
emphasis on pricing, investment characteristics and their use by corporations to manage risk. The securities
examined include: bonds and related fixed income products; futures and options. The goal of the unit is to broaden
students' knowledge of corporate finance in preparation for further study in finance in 300 level courses.

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2. Program Learning Outcomes and Unit Learning Outcomes

The Program Learning Outcomes for this Program are located at
http://sydney.edu.au/business/about/accreditations-and-quality-assurance/AoL/outcomes
Unit Learning Outcomes
Unit Learning Outcomes
On the successful completion of the Unit you should be able to:
Apply modern portfolio theory to design investment strategies

Program Learning Outcomes

1. Business Knowledge
2. Critical Thinking
3. Business Analysis and
Problem-Solving
Apply the CAPM model to asset pricing problems
1. Business Knowledge
2. Critical Thinking
3. Business Analysis and
Problem-Solving
Evaluate corporations using derivative pricing models
1. Business Knowledge
2. Critical Thinking
3. Business Analysis and
Problem-Solving
Analyze financial capital structures, financial assets and financial actions of 1. Business Knowledge
corporations (group assignment)
2. Critical Thinking
3. Business Analysis and
Problem-Solving
4. Communication
Communicate professionally within corporate finance context (homework
1. Business Knowledge
and group assignment)
2. Critical Thinking
3. Business Analysis and
Problem-Solving
4. Communication

3. Assessment

Assessment Name
Essay
Mid-Semester Exam
23 April 2015
Final Exam
Tutorial Homework
Academic Honesty

Group

Compulsory

Program
Learning
Outcomes
Assessed
1, 2, 3, 4

Individual

Compulsory

1, 2, 3

N/A

25%

16:00

20-Apr-2015 04-May-2015

Individual
Individual

Compulsory
Compulsory

1, 2, 3, 4
1, 2, 3, 4

N/A
N/A

50%
5%

10:00

N/A
Weekly
Week 4

Individual/ Assessment
Group
Conditions

Due
Time

Due Date

12 pages 20%

14:00

18-May-2015 29-May-2015

Length

Weight

Closing Date

N/A
N/A

For the meaning and operation of this table, see policy information in the box on the front page or click here

Assessment details
Essay

Task Description
This report requires you to undertake an analysis on how comapnies use financial management tools to battle
against difficulties imposed on them. You are required to apply knowledge learned in class as well as through
your research on real world corporations. You are required to form a group of 3 to complete this task. The
assignment is due at 2pm on 18 May 2015. More detail will be announced in class and on Blackboard.
Assessment Criteria

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1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Conforming with instructions (e.g. word length, font, other instructions)

Presentation, communication & style (written)
Clarity of expression (incl. accuracy, spelling, grammar, punctuation)
Referencing
Use of literature/ Knowledge of theory
Methodology used is the most appropriate to the aims and objectives of the task
Data/information gathering/processing
Analysis
Critical reasoning / critical thinking
Time management/self management

Feedback - What, when and how feedback will be provided for this assessment
Assignment results will be released on Blackboard within two weeks after submission deadline.
Assignment hard copies will be returned to students during tutorial classes. They will contain comments
and/or suggestions from the tutor who marked the assignment.
Students will be able to communicate with their tutors on any specific questions they may have for their
assignments either during tutorial classes or tutor's consultation time.

Mid-Semester Exam 23 April 2015

Task Description
Lectures 1-5 will be covered in the mid-term, and this material will also be included in the final exam.
The midterm exam will be a multiple choice exam. It will be held on Thursday, 23 April 2015 during
normal lecture time. Exam venues will be announced in class.

Assessment Criteria
1. Attention to purpose
2. Use of literature/ Knowledge of theory
3. Methodology used is the most appropriate to the aims and objectives of the task
4. Data/information gathering/processing
5. Context in which subject is used
6. Analysis
7. Problem solving
8. Conceptualisation
9. Critical reasoning / critical thinking
10. Time management/self management

Feedback - What, when and how feedback will be provided for this assessment
Midterm exam questions will be reviewed during the tutorial class following the week of the exam. Students
will be able to ask questions and communicate with their tutors in class.
While individual feedback is not possible, every student will receive feedback about the particular topic he or
she performed worst among all topics examined in the midterm exam.

Final Exam

Task Description
The final exam will cover all material covered in the course. It will be typically short-answer questions
that involve both quantitative and qualitative analysis. Further details of the structure of the exam will
be provided during the final lecture. The exam will be held during the formal university exam period.

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Assessment Criteria
1. Presentation, communication & style (written)
2. Clarity of expression (incl. accuracy, spelling, grammar, punctuation)
3. Use of literature/ Knowledge of theory
4. Methodology used is the most appropriate to the aims and objectives of the task
5. Data/information gathering/processing
6. Analysis
7. Problem solving
8. Conceptualisation
9. Critical reasoning / critical thinking
10. Time management/self management

Feedback - What, when and how feedback will be provided for this assessment
Final mark will be released suject to the University policy and timetable arrangement.

Tutorial Homework

Task Description
Students are required to hand in their work on tutorial questions to the tutor in charge of their assigned tutorial
stream 4 times during the semester, each worth 1.25%. The actual classes that students need to hand in their
tutorial work will be announced during lectures. The assessment of the tutorial work is based on the
correctness of the answers, as well as the effort and seriousness that students demonstrate through their
work. No late submission will be accepted except for those approved by the Special Consideration Committee.
Please contact the Student Information Office for detail about the special consideration process.
Assessment Criteria
1. Conforming with instructions (e.g. word length, font, other instructions)
2. Presentation, communication & style (written)
3. Clarity of expression (incl. accuracy, spelling, grammar, punctuation)
4. Use of literature/ Knowledge of theory
5. Methodology used is the most appropriate to the aims and objectives of the task
6. Data/information gathering/processing
7. Problem solving
8. Conceptualisation

Feedback - What, when and how feedback will be provided for this assessment
Answers to tutorial questions will be explained in tutorial classes.

4. Other Resources for Students

All lectures and seminars are recorded and will be available within Blackboard for student use. Please note the
Business School does not own the system and cannot guarantee that the system will operate or that every
class will be recorded. Students should ensure they attend and participate in all classes.

Based on the feedback from last semester additional practice questions will be provided for this semester. In
particular the McGraw-Hill Connect Learning tools will be used, which is an on-line system that allows you to
work at a time suitable for you. This is a supplementary and non-compulsory resource, so working on these
practice questions is voluntary, and not assessed or assisted by the teach staff (similar to the PASS program

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below). More information will be provided during lecture.

Pass Program
Peer Assisted Study Sessions. This program helps to improve students' academic performance providing extra
free learning opportunities with trained student facilitators, including problem solving practice where relevant, in
areas directly related to understanding the unit concepts more thoroughly. Students register for PASS online at:
http://sydney.edu.au/business/learning/students/pass Email all enquiries about the PASS program to:
[email protected]

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5. Unit Schedule
Week
1
2 Mar 2015
2
9 Mar 2015
3
16 Mar 2015
4
23 Mar 2015
5
30 Mar 2015

List of Topics

Assessments Due

Portfolio Theory
CAPM
Introduction to Forwards, Futures and Options
Contingent Claims II:
Valuation
Real Options
Common week 6 Apr to 12 Apr

6
Capital Structure I
13 Apr 2015
7
Mid-Semester Exam No Lecture
20 Apr 2015
8
27 Apr 2015
9
4 May 2015
10
11 May 2015
11
18 May 2015
12
25 May 2015
13
1 Jun 2015

Capital Structure II

Midterm exam on 23/Apr/2015. During

normal lecture time. Covers Week 1 - 5.
Venues TBA.
Review of midterm exam in tutorial
class.

Debt Valuation: Riskless and Risky Cases

Dividend Policy
Valuation and the Cost of Capital

Essay Due Monday

18/May/2015 14:00:00

Issuing Equity
Review Lecture

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