AZƏRBAYCAN RESPUBLİKASI AZƏRBAYCAN RESPUBLİKASI

TƏHSİL NAZİRLİYİ İQTİSAD UNİVERSİTETİ (UNEC)

AZӘRBAYCAN DÖVLƏT İQTİSAD UNİVERSİTETİ (UNEC)

“MALİYYƏ” FƏNNİNİN

SİLLABUSU
(işci tәdris proqramı)
Fənnin adı MALİYYƏ

Fənnin kodu Tədris ili Semestr Mühazirə Məşğələ Kredit

2203/Y 2019/2020 payız

Tədris dili  Azərbaycan  Rus  İngilis

Fənnin növü  Məcburi  Seçmə

Prerekvizit fənlər Müəssisənin maliyyəsi

Müəllimin/müəllimləri Abbasov Əkbər Bəxtiyar oğlu

n S.A.A

Məsləhət saatı şənbə, 12-00

Müəllimlə əlaqə 0553530800, [email protected]

The course develops theoretical framework for understanding

Kursun təsviri
and analyzing major financial problems of modern market
environment. The course covers basic models of valuation of
corporate capital, including pricing models for primary financial
assets, real assets valuation and investment projects analysis,
capital structure and various types of corporate capital
employed, derivative assets and contingent claims on assets. It
provides necessary knowledge in evaluating different
management decisions and its influence on corporate
performance and value.
The main objective of the course is to provide the conceptual
Kursun məqsədi
background for financial analysis from the point of corporate
(nəticələri)
value creation. The course develops theoretical framework for
understanding and analyzing major financial problems of
modern firm in the market environment. The course covers
basic models of corporate capital valuation, including pricing
models for primary financial assets, real assets valuation and
investment projects analysis, capital structure, derivative assets
and contingent claims on assets. The course is focused on
developing skills in analyzing corporate behavior in capital
markets and the relationship of agent and principal in raising
funds, allocating capital, distributing returns. It provides
necessary knowledge in evaluating different management
decisions and their influence on corporate performance and
value. The course requires the knowledge in micro and
macroeconomics.
 Main reading
Ədəbiyyat siyahısı
1. Ross, Westerfield, Jaffe. Corporate Finance. 10th Edition

Supplementary reading
1. www.bloomberg.com
2. finance.yahoo.com
3. www.wsj.com
4. www.ft.com
5. www.reuters.com/finance

MÖVZULAR
Week Topics Lecture Content
№ №
1 Introduction to 1 1.1 What Is Corporate Finance?
corporate finance The Balance Sheet Model of the Firm
Source: Ross, The Financial Manager
Westerfield Jaffe, 1.2 The Corporate Firm
Corporate Finance, The Sole Proprietorship
10th Edition. Chapter The Partnership
1. The Corporation
A Corporation by Another Name
1.3 The Importance of Cash Flows
1.4 The Goal of Financial Management
Possible Goals
The Goal of Financial Management
A More General Goal
1.5 The Agency Problem and Control
of the Corporation
Agency Relationships
Management Goals
Do Managers Act in the Stockholders’
Interests?
Stakeholders
1.6 Regulation
The Securities Act of 1933 and the
Securities
Exchange Act of 1934
Sarbanes-Oxley
2 Financial statements 2 2.1 The Balance Sheet
and cash flow Liquidity
Source: Ross, Debt versus Equity
Westerfield Jaffe, Value versus Cost
Corporate Finance, 2.2 The Income Statement
10th Edition. Chapter Generally Accepted Accounting Principles
2. Noncash Items
Time and Costs
2.3 Taxes
Corporate Tax Rates
Average versus Marginal Tax Rates
2.4 Net Working Capital
2.5 Financial Cash Flow
2.6 The Accounting Statement of Cash
Flows
Cash Flow from Operating Activities
 Cash Flow from Investing Activities
Cash Flow from Financing Activities
2.7 Cash Flow Management
3-4 Time value of the 3-4 3.1 Valuation: The One-Period Case
money 3.2 The Multiperiod Case
Source: Ross, Future Value and Compounding
Westerfield The Power of Compounding: A Digression
Jaffe,Corporate Present Value and Discounting
Finance, 10th Edition. Finding the Number of Periods
Chapters 4-5. The Algebraic Formula
3.3 Compounding Periods
Distinction between Stated Annual Interest
Rate and Effective Annual Rate
Compounding over Many Years
Continuous Compounding
3.4 Simplifications
Perpetuity
Growing Perpetuity
Annuity
Growing Annuity

Net Present Value and Other

Investment Rules
4.1 Why Use Net Present Value?
4.2 The Payback Period Method
Defining the Rule
Problems with the Payback Method
4.3 The Discounted Payback Period
Method
4.4 The Internal Rate of Return
Definition of Independent and Mutually
Exclusive Projects
Two General Problems Affecting Both
Independent and Mutually Exclusive
Projects
Problems Specific to Mutually Exclusive
Projects
Redeeming Qualities of IRR
4.5 The Profitability Index
Calculation of Profitability Index
5 Interest rates and 5 5.1 Bonds and Bond Valuation
bond valuation Bond Features and Prices
Source: Ross, Bond Values and Yields
Westerfield Jaffe, Interest Rate Risk
Corporate Finance, Finding the Yield to Maturity: More Trial
10th Edition. Chapter and Error
8 Zero Coupon Bonds
5.2 Government and Corporate Bonds
Government Bonds
Corporate Bonds
Bond Ratings
5.3 Bond Markets
How Bonds Are Bought and Sold
Bond Price Reporting
A Note on Bond Price Quotes
5.4 Inflation and Interest Rates
 Real versus Nominal Rates
Inflation Risk and Inflation-Linked Bonds
The Fisher Effect
5.5 Determinants of Bond Yields
6 Stock valuation 6 6.1 The Present Value of Common Stocks
Source: Ross, Dividends versus Capital Gains
Westerfield Jaffe, Valuation of Different Types of Stocks
Corporate Finance, 6.2 Estimates of Parameters in the
10th Edition. Chapter Dividend
9. Discount Model
Dividends or Earnings: Which to Discount?
The No-Dividend Firm
6.3 Growth Opportunities
NPVGOs of Real-World Companies
Growth in Earnings and Dividends
versus Growth Opportunities
6.4 Comparables
Price-to-Earnings Ratio 287
Enterprise Value Ratios 290
6.5 Valuing the Entire Firm
6.6 The Stock Markets
Dealers and Brokers
Organization of the NYSE
NASDAQ Operations
Stock Market Reporting
7 Risk and return 7 7.1 Returns
Source: Ross, Dollar Returns
Westerfield Jaffe, Percentage Returns
Corporate Finance, 7.2 Holding Period Returns
10th Edition. Chapter 7.3 Return Statistics
10. 7.4 Average Stock Returns and
Risk-Free Returns
7.5 Risk Statistics
Variance
Normal Distribution and Its Implications
for Standard Deviation
7.6 More on Average Returns
Arithmetic versus Geometric Averages
Calculating Geometric Average Returns
Arithmetic Average Return or Geometric
Average Return?
8 Return and risk: The 8 8.1 Individual Securities
Capital Asset 8.2 Expected Return, Variance, and
Pricing Model Covariance
(CAPM) Expected Return and Variance
Source: Ross, Covariance and Correlation
Westerfield 8.3 The Return and Risk for Portfolios
Jaffe,Corporate The Expected Return on a Portfolio
Finance, 10th Edition. Variance and Standard Deviation of a
Chapter 11. Portfolio
8.4 The Efficient Set for Two Assets
8.5 The Efficient Set for Many Securities
Variance and Standard Deviation in a
Portfolio of Many Assets
8.6 Diversification
The Anticipated and Unanticipated
 Components of News
Risk: Systematic and Unsystematic
The Essence of Diversification
8.7 Riskless Borrowing and Lending
The Optimal Portfolio
8.8 Market Equilibrium
Definition of the Market Equilibrium
Portfolio
Definition of Risk When Investors
Hold the Market Portfolio
The Formula for Beta
8.9 Relationship between Risk and
Expected Return (CAPM)
Expected Return on Market
Expected Return on Individual Security
9 Risk, cost of capital, 9 9.1 The Cost of Capital
and valuation 9.2 Estimating the Cost of Equity
Source: Ross, Capital with the CAPM
The Risk-Free Rate
Westerfield Jaffe,
Market Risk Premium
Corporate Finance, 9.3 Estimation of Beta
10th Edition. Chapter Real-World Betas
13. Stability of Beta
Using an Industry Beta
9.4 Determinants of Beta
Cyclicality of Revenues
Operating Leverage
Financial Leverage and Beta
9.5 The Dividend Discount Model Approach
Comparison of DDM and CAPM
9.6 Cost of Capital for Divisions and
Projects
9.7 Cost of Fixed Income Securities
Cost of Debt
Cost of Preferred Stock
9.8 The Weighted Average Cost of Capital
9.9 Valuation with R WACC
Project Evaluation and the RWACC
Firm Valuation with the RWACC
9.10 Flotation Costs and the Weighted
Average Cost of Capital
The Basic Approach
Flotation Costs and NPV
Internal Equity and Flotation Costs
10 Corporate capital 10 10.1 The Capital Structure Question
struture and the Pie Theory
Source: Ross, 10.2 Maximizing Firm Value versus
Maximizing Stockholder Interests
Westerfield
10.3 Financial Leverage and Firm Value:
Jaffe,Corporate Leverage and Returns to Shareholders
Finance, 10th Edition. The Choice between Debt and Equity
Chapter 16. 10.4 Modigliani and Miller: Proposition II
(No Taxes)
Risk to Equityholders Rises with Leverage
Proposition II: Required Return to
Equityholders Rises with Leverage
 MM: An Interpretation
10.5 Taxes
The Basic Insight
Present Value of the Tax Shield
Value of the Levered Firm
Expected Return and Leverage under
Corporate Taxes
The Weighted Average Cost of Capital,
RWACC,
and Corporate Taxes
Stock Price and Leverage under Corporate
Taxes
11 Agency costs and 11 11.1 Costs of Financial Distress
asymmetric Bankruptcy Risk or Bankruptcy Cost?
information 11.2 Description of Financial Distress
Source: Ross, Costs
Westerfield Direct Costs of Financial Distress: Legal
Jaffe,Corporate and
Finance, 10th Edition. Administrative Costs of Liquidation or
Chapter 17. Reorganization
Indirect Costs of Financial Distress
Agency Costs
11.3 Can Costs of Debt Be Reduced?
Protective Covenants
Consolidation of Debt
11.4 Integration of Tax Effects and
Financial Distress Costs
11.5 Signaling
11.6 Shirking, Perquisites, and Bad
Investments:
Effect of Agency Costs of Equity on
Debt–Equity Financing
11.7 The Pecking-Order Theory
Rules of the Pecking Order
11.8 Personal Taxes
The Basics of Personal Taxes
The Effect of Personal Taxes on Capital
Structure
11.9 How Firms Establish Capital Structure
12 Dividends and other 12 12.1 Different Types of Payouts
payouts 12.2 Standard Method of Cash
Source: Ross, Dividend Payment
Westerfield 12.3 The Benchmark Case: An Illustration
Jaffe,Corporate of the Irrelevance of Dividend Policy
Finance, 10th Edition. Current Policy: Dividends Set Equal to
Chapter 19. Cash Flow
Alternative Policy: Initial Dividend Is
Greater
Than Cash Flow
The Indifference Proposition
Homemade Dividends
Dividends and Investment Policy
12.4 Repurchase of Stock
Dividend versus Repurchase
12.5 Personal Taxes, Dividends, and
Stock Repurchases
 Firms without Sufficient Cash to Pay a
Dividend
Firms with Sufficient Cash to Pay a
Dividend
12.6 Real-World Factors Favoring
a High-Dividend Policy
Desire for Current Income
Behavioral Finance
Agency Costs
Information Content of Dividends and
Dividend Signaling
12.7 The Clientele Effect
12.8 Stock Dividends and Stock Splits
Value of Stock Splits and Stock Dividends
Reverse Splits
13 Short-term finance 13 13.1 Tracing Cash and Net Working Capital
and planning 13.2 The Operating Cycle and the Cash
Source: Ross, Cycle
Westerfield Defining the Operating and Cash Cycles
Jaffe,Corporate The Operating Cycle and the Firm’s
Finance, 10th Edition. Organization Chart
Chapter 26. Calculating the Operating and Cash Cycles
Interpreting the Cash Cycle
A Look at Operating and Cash Cycles
13.3 Some Aspects of Short-Term
Financial Policy
The Size of the Firm’s Investment in
Current Assets
Alternative Financing Policies for Current
Assets
13.4 Cash Budgeting
Cash Outflow
The Cash Balance
13.5 The Short-Term Financial Plan
Unsecured Loans
Secured Loans
Other Sources
14 Raising capital (long- 14 14.1 Early-Stage Financing and Venture
term financing) Capital
Source: Ross, Venture Capital
Westerfield Stages of Financing
Jaffe,Corporate Venture Capital Investments and
Finance, 10th Edition. Economic Conditions
Chapter 20. 14.2 The Public Issue
14.3 Alternative Issue Methods
14.4 The Cash Offer
Investment Banks
The Offering Price
Underpricing: A Possible Explanation
14.5 The Announcement of New Equity
and the Value of the Firm
14.6 The Cost of New Issues
The Costs of Going Public: A Case Study
14.7 Rights
The Mechanics of a Rights Offering
Subscription Price
 Number of Rights Needed to Purchase a
Share
Effect of Rights Offering on Price of Stock
Effects on Shareholders
The Underwriting Arrangements
14.8 The Rights Puzzle
14.9 Dilution
Dilution of Proportionate Ownership
Stock Price Dilution
Book Value
Earnings Per Share
14.10 Shelf Registration
14.11 Issuing Long-Term Debt
15 Options and other 15 15.1 Options
financial derivatives 15.2 Call Options
Source: Ross, The Value of a Call Option at Expiration
Westerfield 15.3 Put Options
Jaffe,Corporate The Value of a Put Option at Expiration
Finance, 10th Edition. 15.4 Selling Options
Chapters 22,24. 15.5 Option Quotes
15.6 Combinations of Options
15.7 Valuing Options
Bounding the Value of a Call
The Factors Determining Call Option
Values
The Factors Determining
Put Option Values
15.8 An Option Pricing Formula
A Two-State Option Model
15.9 Forward Contracts
15.10 Futures Contracts
15.11 Swaps Contracts
Interest Rate Swaps
Currency Swaps
Credit Default Swaps (CDS)

Grading method:

The students will be graded based on:

1. Two quizzes each being 10 points

2. Independent project** 10 points
3. Class attendance** 10 points
4. Class activity 10 points
5. Final exam 50 points
 **The projects are expected to be delivered in class session and in a group
of two-three students and each student will be expected to participate in the
project presentation. Each student will be graded independently from other
member of group. The projects are expected to be analytical. The descriptive
projects shall be half graded. Please address to the professor if you need an
explanation of analytical and descriptive.
The e-version of the project shall be given to the professor for presenting to
the Dean`s office.
***Maximum 10 min accidental lateness will be tolerated.

Project topics:

At times research topics will be provided for students’ research projects.