INTERNATIONAL UNIVERSITY OF JAPAN
Graduate School of International Relations
Academic Year: 2015/2016
Term: Fall
Course
Course code
Course title
ADC6586
Corporate Finance
Name of Instructor
Atsushi Chino
Credit Number: 2
Instructor’s contact
Office#
Office Hours
E-mail:
Information
329
TBD
achino@iuj.ac.jp
Class Schedule
Day / Time
TBD
Course Description: This is an introductory course in finance at the graduate level. The subject of
finance broadly consists of two major areas: asset pricing and corporate finance. The former is
concerned with pricing of financial assets and investment strategy in these assets while the later
focuses on valuation and financing of investment projects, payout policy, and various other
aspects of corporate financial decisions. In this course, we will start with learning how to price
financial assets and discuss how we should correctly ‘discount’ future cash flow streams. Then we
will study the concept of ‘risk’ in finance and derive an implied relationship between risk and return.
In the later part of the course, we will shift our focus to corporate finance and discuss the theory of
capital structure and payout policy.
Learning Objectives: The objective of the course is for students to acquire fundamental concepts and
analytical tools used in finance. In particular, students will learn how to evaluate the value of an investment
project and how to finance the project (i.e., debt or equity) in the course.
Career Relevance: This course will be relevant for students who are pursuing finance-related careers in
industries or those who are responsible for monitoring financial markets in public sectors.
Course Context or Rationalization: This is a foundational course for the ‘Investment and Asset Pricing’
course which will be offered in winter. In addition, this course would be useful for other finance and
accounting related courses in GSIR/GSIM.
Delivery Methods: The course will cover selected topics of the required textbook and the material will be
presented in the two weekly lectures. In addition, I will assign about 3 or 4 problem sets which will closely
follow the lecture material. I encourage you to work in a group to solve for problem sets, and you can turn in
your answers either individually or in a group. If you turn in your answers in a group, please list the names of
all group members at the top of the 1st page of your answers. Please bring an electronic calculator to
classes and exams. All my class slides and materials will be made available to you after each class at my
network course folder.
Assessment: Grades will be based on the midterm exam, the final exam, and problem sets. The final exam
will be cumulative. Problem sets will count for 20% of your final grade and exams will count for the remaining
80% (the midterm 30% and the final exam 50%). The midterm will be held in class on [TBD]. The final is
scheduled on the final examination week. There will be no make-up exam.
Prerequisite: None
Textbook(s)
Required: Principles of Corporate Finance, 11th Edition, by Brealey, Myers, and
Allen, McGraw Hill, 2013, 978-0077151560, Global Edition.
Class Outline
1. Present value calculation (Present value and future value)
2. Present value calculation (Net present value and internal rate of return)
3. Present value calculation (Present value under finite and infinite periods)
4. Bond pricing (Bond pricing under a constant interest rate, Yield to maturity)
5. Bond pricing (Risk of bonds: duration analysis)
6. Bond pricing (Term structure of interest rates and bond pricing)
7. Equity pricing (Common stock and dividends)
8. Equity pricing (Discount rate)
9. Equity pricing (Estimating discount rate (1))
10. Mid-term exam
11. Portfolio (Risk and return of portfolio)
12. Portfolio (Diversification of risk of individual securities)
13. Portfolio (Market portfolio and market risk)
14. Portfolio (Estimating discount rate (2): Capital asset pricing model)
15. Capital budgeting (WACC: Weighted average cost of capital)
16. Capital budgeting (Company and project-specific costs of capital)
17. Capital structure (MM irrelevance proposition)
18. Capital structure (Taxes, agency costs, and financial distress)
19. Payout policy (To pay dividend or not to pay? : MM irrelevance proposition)
20. Payout policy (Dividends and stock repurchases)
Others (if any)