
Finance II
Code: 102328Credits: 6
| Degree programme | Type | Course |
|---|---|---|
| Business Administration and Management | OB | 3 |
| Economics | OP | 3 |
| Economics | OP | 4 |
Contact lecturer
- Name :
- Carlota Menendez Plans
- Email :
- carlota.menendez@uab.cat
Teaching staff
- Antonio Vila Fernandez Santacruz
- Ramon Sanchez Vila
- Florina Raluca Silaghi
- Paulino Aguilera Malagon
Group languages
You can consult this information at the end of the document.
Prerequisites
Standard requirements for the third course of the undergraduate degree and ii) having followed the subject Finance I. iii) Students registered in Finance II are also expected to have the skills assigned to previous courses.
Objectives
The course Finance II is aimed at providing basic knowledge necessary for capital budgeting decision making process. Departing from the concepts and the form of reasoning learned in Finance I, this course analyzes and studies some decisions that financial manager has to make on regular basis. All companies are faced with new investment projectswhich they have to analyze from both, economic and financial perspective. In this course the principal existent techniques will be studied, their application, interpretation and adaption to real world. In addition, as there is no investment without financing, the characteristics of the principal source of financing available to companies will be studied, differentianting bwtween small and big companies.
The principal concept of the course is the corporate value creation in the real economy through the selection of nwe investments that are most suited to the corporate strategy. The interaction investment-financing is very important for the company in order to be able to reach its return objectives, without overlooking the cost of capital, always established depending on risk. The important role of risk in finance, which has been already studied in Finance I, continues to be present in deciding the feasibility of new investments in economic and financial sense. In order to create value it is necessary to engage in investment projects capable to create value which depends on the return of the investment and the cost of capital or cost of financing.
Learning outcomes
- Capacity to adapt to changing environments.
- Capacity to continue future learning independently, acquiring further knowledge and exploring new areas of knowledge.
- Select and generate the information needed for each problem, analyse it and make decisions based on this information.
- Make decisions in situations of uncertainty and show an enterprising and innovative spirit.
- A capacity of oral and written communication in Catalan, Spanish and English, which allows them to summarise and present the work conducted both orally and in writing.
- Organise work, in terms of good time management and organisation and planning.
- Demonstrate initiative and work independently when required.
- Work as part of a team and be able to argue own proposals and validate or refuse the arguments of others in a reasonable manner.
- Formulate indebtedness and dividend policies.
- Understand the formation of value from the perspective of shareholders.
- Apply the methodology of financial economy reasoning and differentiate it from its equivalent in real economy.
- Assess investment opportunities from a strategic perspective.
- Apply the main principles of risk management.
- Assess ethical commitment in professional activity.
Contents
1 Investment projects, financing projects and aggregated projects.
1.1 Structuring of investment projects
1.2 Structuring of financing projects
1.3 Structuring of aggregated projects.
2 Capital budgeting techniques for new investment projectes: applictiona and decision criteria
2.1 The Net Present Value (NPV)
2.2 Internal Rate or Return (IRR) versus màximum cost of capital
2.3 Net Final Value (NFV)
2.4 Complementary criteria: profitability index, discounted pay-bak, equivalent annual annuity
2.5 Other aspects to consider: anomalies in capital budgeting
2.6 Analysis of investment projects through the theory of options: real options
3 Risk and uncertainty in capital budgeting
3.1 Risk, uncertainty, forecasts and goals
3.2 Expected value, risk premium and estimating the required rate of return in capital budgeting
3.3 Introduction to sensitivity analysis
4. Effect of inflation
4.1 Expected inflation and adptation rate
4.2 Investment project, financing projects and aggregated projects in nominal currency units
5 Capital budgeting and strategy
5.1 Market value as the core of capital budgeting
5.2 Competitive advantage and project analysis
5.3 Ethical investment decisions. Socially responsible capital budgeting: Environmental sustainability, social sustainability and financial sustainability
6 Financing sources
6.1 Debt versus equity
6.2 Issuing new shares
6.3 Internal financing
7 Introduction to the financial structure of the company and the dividend policy
7.1 Effects of indebtedness on the company and shareholders
7.2 Effects of dividend distribution on the company and shareholders
7.3 Financial policy and value creation
Learning activities and methodology
| Title | Hours | ECTS | Learning outcomes |
|---|---|---|---|
| Information search and analysis of exercises and cases | 10 | 0.4 | 2, 3, 6, 7, 8 |
| Solving exercises in the classroom | 17 | 0.68 | 3, 4, 5, 10, 11, 13 |
| Lectures | 32.5 | 1.3 | 5, 10, 11, 13 |
| Tutorial | 10.5 | 0.42 | 2, 3, 4, 5, 6, 10, 11, 13 |
| Study | 45 | 1.8 | 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 13 |
| Findig the solution of exercises and scenarios presented | 30 | 1.2 | 1, 2, 3, 4, 5, 6, 7, 8, 10, 11, 13 |
Teaching will be offered on campus
Direct activities consist in 49.5 hours of conventional teaching, thar are divided in 65,6% of theory lectures and 34,4% of practical sessions. Theory lectures will consist in active masterclasses where the professor covers the topics but that require an active participation of the student so to understand an learn how to aplly concepts. The professor will encourage student participation in the learning process by suggesting questions and/or samll study cases to analyze. The practical part wil consist in solving exercises and cases either in the classroom or in the computer lab.
\"The propoosed teaching methodology my undergo some modifications according to the restrictions imposed by the health authorities on on-campus courses\"
Assessment
Continuous assessment activities
| Title | Weight | Hours | ECTS | Learning outcomes |
|---|---|---|---|---|
| Third exam of continous evaluation | 50% | 2 | 0.08 | 3, 4, 5, 6, 7, 8, 12, 13, 14 |
| Second exam of continous evaluation | 25% | 1.5 | 0.06 | 1, 2, 5, 7, 8, 9, 10, 11, 12, 13, 14 |
| First exam of continous evaluation | 25% | 1.5 | 0.06 | 5, 6, 7, 8, 10, 11, 13, 14 |
In the course Finance II achievements of students are evaluated continuously. The evaluation includes three activities of two different types. The final exam accounts for 50% of the final grade and the partial exam weights 25%. The activities that determine the remaining 25% will be established by the responsible teacher. The final grade for the course will be the result of calculating the weighted average of the three grades according to the assigned weights. Participation in all assessment tests is mandatory in order to pass the course.
The responsible professor will establish the days of the tests that make up the continuous evaluation that are not the final and partial exam, whose dates are set by the faculty.
All students are required to perform the evaluation activities. If the student's grade is 5 or higher, the student passes the course and it cannot be subject to further evaluation. If the student grade is less than 3.5, the student will have to repeat the course the following year. Students who have obtained a grade that is equal to or greater than 3.5 and less than 4.9 can take a second chance exam. The lecturers will decide the type of the second chance exam. When the second exam grade is greater than 5, the final grade will be a PASS with a maximum numerical grade of 5. When the second exam grade is less than 5, the final grade will be a FAIL with a numerical grade equal to the grade achieved in the course grade (not the second chance exam grade).
If a student decides to do not take the final exam will be considered “unassessable”. Plagiarism or the use of AIto solve the established tasks to help the study or to evaluate implies a 0 as the final grade of the subject.
This subject does not offer the option for comprehensive evaluation.
For this subject, the use of Artificial Intelligence (AI) technologies is permitted exclusively for support tasks, such as bibliographic or information searches, text correction, or translations. The student must clearly indicate which parts have been generated using this technology, specify the tools used, and include a critical reflection on how these tools have influenced the process and the final outcome of the activity.
FAILURE TO BE TRANSPARENT ABOUT THE USE of AI in this subject will be considered a breach of academic honesty and may result in partial or total penalties on the grade for the affected activity, or more severe sanctions in serious cases.
Calendar of evaluation activities
The dates of the different evaluation tests that make up the 25% will be announced at the beginning of the semester or well in advance.
The date of the partial, final and recovery exam of the subject is scheduled in the Faculty's exam calendar.
\"The dates of evaluation activities cannot be modified, unless there is an exceptional and duly justified reason why an evaluation activity cannot be carried out. In this case, the degree coordinator will contact both the teaching staff and the affected student, and a new date will be scheduled within the same academic period to make up for the missed evaluation activity.\"Section 1 of Article 115. Calendar of evaluation activities (Academic Regulations UAB). Students of the Faculty of Economics and Business, who in accordance with the previous paragraph need to change an evaluation activity date must process the request by filling out an Application for exams' reschedule
Grade revision process
After all grading activities have ended, students will be informed of the date andway in which the course gradeswill be published. Students will be also be informed of the procedure, place, date and time of grade revision following University regulations.
Retake Process
\"To be eligible to participate in the retake process, it is required for students to have been previously been evaluated for at least two thirds of the total evaluation activities of the subject.\" Section 3 of Article 112 ter. The recovery (UAB Academic Regulations). Additionally, it is required that the student to have achieved an average grade of the subject between 3.5 and 4.9.
The date of the retake exam will be posted in the calendar of evaluation activities ofthe Faculty. Students who take this exam and pass, will get a grade of 5 for the subject. If the student does not pass the retake,the grade will remain unchanged, and hence, student will fail the course.
Irregularities in evaluation activities
In spite of other disciplinary measures deemed appropriate, and in accordance with current academic regulations, \"in the case that the student makes any irregularity that could lead to a significant variation in the grade of an evaluation activity, it will be graded with a 0, regardless of the disciplinary process that can be instructed. In case of various irregularities occur in the evaluation of the same subject, the final grade of this subject will be 0\". Section 10 of Article 116. Results of the evaluation. (UAB Academic Regulations).
The completion of assessment activities is subject to the provisions set out in this course guide and in the "Policy of the School of Economics and Business on the Detection of Irregularities during Assessment Activities", which regulates the conditions under which assessment tasks are conducted and the procedures applicable in cases where indications of irregularities are detected. Students are encouraged to consult the policy.
Bibliography
- BREALEY, R., S.C. MYERS i F. ALLEN. Principios de finanzas corporativas. 13 edició (2020). Madrid: McGraw-Hill,
- BREALEY, R., S.C. MYERS, F.ALLEN AND A.EDMAN. Principles of Corporate Finance ISE. (2022). McGraw-Hill ISBN 9781265074159
- DAMODARAN, A. Applied Corporate Finance. 4th. Edition John Wiley&Sons. (2015). ISBN-13:978-1118808931. (http://pages.stern.nyu.edu/~adamodar/)
- DAYANANDA,D., IRONS, R., HARRISON,S., HERBOHN,J. I P.ROWLAND. Capital Budgeting Financial Appraisal of Investment Projects. ebook Cambridge University Press. Online Publication. 2010. online ISBN: 978011753701
- HILLIER,D.; S.ROSS, R.W.WESTERFIELD, J. JAFFE and B.D.JORDAN. Corporate Finance. 4ª edition. (2020)
- SHILLER, R.J. Las finanzas en una sociedad justa. Deusto (2012)
- ROSS, S; R:W:WESTERFIELD, J.JAFFE and B.D. JORDAN. Fundamentos de Finanzas Corporativas. 13ª edicion (2023). McGraw-Hill. ISBN 9786071519061
- SHAPIRO,A.C. Capital Budgeting and Investment Analysis. Prentice Hall. 2005. ISBN-13: 978-0130660909
- VERNIMMEN,P., Y.L. FUR, M.DALLOCHIO, A.SALVI, P.QUIRY. Corporate Finance: Theory and Practice. 5ª edition. J.Wiley & Sons (2017) ISBN: 9781119424482. https://onlinelibrary-wiley-com.are.uab.cat/doi/book/10.1002/9781119424444
Software
The excel spreadsheet will be used to learn the concepts that are being studied in this subject
Course groups and languages
The information provided is provisional until November 30. After this date, you will be able to consult the language of each group through this link. To access the information, you will need to enter the course CODE
| Type of teaching | Group | Language | Semester | Shift |
|---|---|---|---|---|
| (TE) Theory | 2 | Catalan | second semester | morning-mixed |
| (PAUL) Classroom practices | 2 | Catalan | second semester | morning-mixed |
| (PLAB) Practical laboratories | 2 | Catalan | second semester | morning-mixed |
| (TE) Theory | 4 | English | second semester | morning-mixed |
| (PAUL) Classroom practices | 4 | English | second semester | morning-mixed |
| (PLAB) Practical laboratories | 4 | English | second semester | morning-mixed |
| (TE) Theory | 13 | Catalan | second semester | morning-mixed |
| (PAUL) Classroom practices | 13 | Catalan | second semester | morning-mixed |
| (PLAB) Practical laboratories | 13 | Catalan | second semester | morning-mixed |
| (TE) Theory | 52 | Catalan | second semester | afternoon |
| (PAUL) Classroom practices | 52 | Catalan | second semester | afternoon |
| (PLAB) Practical laboratories | 52 | Catalan | second semester | morning-mixed |
| (TE) Theory | 60 | Catalan | second semester | morning-mixed |
| (PAUL) Classroom practices | 60 | Catalan | second semester | morning-mixed |
| (PLAB) Practical laboratories | 60 | Catalan | second semester | morning-mixed |