Universidad Carlos III de Madrid
Financial Management
204-13170
Iowa State Course Substitution
Technical Elective
ME
Course Info
International Credits:
6.0
Converted Credits:
3.5
Country:
Spain
Language:
English
Course Description:
The central aim of this subject is to present the different financial instruments that a firm may use to raise capital. Once these financial instruments are introduced, the concept of cost of capital is defined as a necessary parameter for defining a firm¿s value.
The knowledge that the student has to achieve can be divided in the following objectives:
- Compute a firm value
- Compute the cost of capital of a firm.
- Understand that a firm is a portfolio of financial instruments which is closely connected to a portfolio of investment projects.
- Distinguish a firm's cost of capital from a project cost of capital.
- Be able to value companies as well as investment projects.
- Connect the different shareholders¿ compensation mechanisms with the different financial instruments that a firm uses for raising capital.
Specific capacities:
- Understand the concept of firm value.
- Be able of using comparables as well as different ways to compute a firm value.
- Define a flexible methodology for computing the cost of capital of firms and projects.
- Define a criterium for distinguishing the situation in which is optimal to use dividends instead of share repurchases for compensating shareholders.
General capacities:
- The capacity to use reasonable approximations for achieving a financial objective
- The ability to tackle uncertainty issues, while making sensibility analyses in such uncertain freameworks.
- The relevance of approaching a financial objective through different ways in order to have more sound financial results.
The attitudes that a student should acquire:
- A flexible view in order to change a decision if new information has arrived.
- A critical view of managers in order to understand that a firm value is not always what the managers pursue.
- A collaborative attitude in order to obtain from the different agents the information required for achieving difficult objectives.
- Understand that behind any managerial decision there is an ethical code.
Review
- Evaluated Date:
- June 24, 2022
- Evaluated:
- Christian Schwartz
- Expiration Date:
- June 24, 2027