THE UNIVERSITY OF HONG KONG
FACULTY OF BUSINESS AND ECONOMICS
School of Economics and Finance
ECON6033 - CORPORATE FINANCE
Semester B, 2013/2014
I. Information on Instructor
Instructor:
Office:
Phone:
E-mail:
Office hour:
Dr. Xianming ZHOU
K K Leung 834
3917 8564
xianming.zhou@hku.hk
By appointment
II. Course Description and Objectives
Course Objective:
The objective of this course is to develop a solid understanding of corporate finance. The course
covers important issues involved in financial decisions made at the firm level, which include the
cost of capital, capital structure, capital budgeting, raising capital, and mergers and acquisitions.
This course is designed to cover an in-depth discussion of the important approaches in modern
corporate finance and, by analyzing corporate finance cases, to expose students to the types of
financial issues that they are likely to encounter as corporate managers and investors.
Course Materials:
Ross, Westerfield, and Jaffe, 2010, Corporate Finance, 9th edition, McGraw-Hill
Class notes, case materials, and assigned readings to be distributed in class.
III. Intended Learning Outcomes (ILOs)
On completion of this course, students should:
ILO1: Be able to understand fundamental issues in corporate finance.
ILO2: Be able to understand fundamental theories in corporate finance.
ILO3: Be able to apply financial theories to corporate finance decisions.
ILO4: Have acquired analytical skills in analyzing real-world cases in corporate finance.
ILO5: Have developed skills in group work, including communication, presentation, and
leadership
1
IV. Alignment of Program and Course Outcomes
Course Learning
Outcome
Program Learning Outcome
1. To master current theory and knowledge in the field of economics
ILOs 1, 2 and 3
2. To master the skills to deal with economic data
ILO 4
3. To develop the ability to apply economics to real world problems
ILOs 4 and 5
4. To develop global and regional outlook and astuteness
ILO 4
V. Teaching and Learning Activities
Lectures on Major Concepts and Issues: Interactive lectures with power-point slides will be
conducted with the lecturer explaining and illustrating the concepts and analytical skills.
Students will be invited for active participation for in-class discussion, to share their views and
experiences in applying the concepts. (Major focus: ILOs 1, 2 and 3)
Review Questions: Selected textbook problems and related review questions will be assigned for
students to practice and gain better understanding of the concepts and issues discussed. (Major
focus: ILOs 1, 2 and 3)
Group Work on Assignments and Case Analysis: Students will form study groups. In addition to
completing assigned review questions, students will analyse two corporate finance cases. For each
case, each study group will need to analyse it in advance and submit a written report. (Major focus:
ILOs 1, 2, 3, 4 and 5)
VII. Assessment
Assessment Method
Weighting
ILOs
1. Lecture attendance and participation
20%
ILOs 1, 2 and 3
2. Written assignments
30%
ILOs 1, 2, 3, 4 and 5
3. Test
25%
ILOs 1, 2 and 3
4. Project
25%
ILOs 1, 2, 3, 4 and 5
Total
100%
VII. Standards for assessment
Lecture Attendance and Participation (20 points):
Attendance will be taken for the lectures. The attendance and individual contribution in class
discussion will be the main factors in assigning points for this component.
Grading Criteria
2
A
B
C
Well prepared for
class discussion,
very active in
sharing views,
and attended at
least 90% of
classes
Reasonably
prepared for class
discussion, quite
active in sharing
views, and
attended at least
80% of classes
Not well prepared
for class
discussion, limited
sharing of views,
and attended at
least 70% of
classes
D
Not well prepared
for class
discussion, no
sharing of views,
and attended at
least 60% of
classes
F
No preparation
for class
discussion, no
sharing of views,
and attend less
than 50% of
classes
Written Assignments (30 points):
All assignments, including selected review questions and case reports, will be graded.
Grading Criteria
A
B
C
D
F
 90%
75% ~ 90%
60% ~ 75%
50% ~ 60%
 50%
Test (25 points):
An in-class test will enable students to demonstrate individually their knowledge and
understanding of corporate finance concepts and analytical skills.
Grading Criteria
A
B
C
D
F
 90%
75% ~ 90%
60% ~ 75%
50% ~ 60%
 50%
Project (25 points):
The term project enables students to demonstrate their comprehensive knowledge and analytical
skills in analyzing real-world financial decisions.
Grading Criteria
A
B
C
Excellent or very
good ratings on
all three criteria
Good to very
good ratings on
some or all three
criteria
Fair to good ratings
on some or all three
criteria
3
D
Fair ratings on all
three criteria.
F
Absent from case
discussion or fail
to submit the case
report
VIII. Academic Conduct
The University Regulations on academic dishonesty will be strictly enforced. Please check the
University Statement on plagiarism on the web: http://www.hku.hk/plagiarism/
Academic dishonesty is behavior in which a deliberately fraudulent misrepresentation is
employed in an attempt to gain undeserved intellectual credit, either for oneself or for another. It
includes, but is not necessarily limited to, the following types of cases:
Plagiarism: The representation of someone else’s ideas as if they are one’s own. Where the
arguments, data, designs, etc., of someone else are being used in a paper, report, oral presentation,
or similar academic project, this fact must be made explicitly clear by citing the appropriate
references.
Cheating on In-class Exams: The covert gathering of information from other students, the use of
unauthorized notes, unauthorized aids, etc.
IX. Course Schedule
Week
Topics
Reading materials
1 (Jan 20)
Introduction, financial statements, long-term planning
Ch. 1, 2, 3
2 (Jan 27)
DCF valuation, investment rules
Ch. 4, 5
3 (Feb 10)
Capital investment decisions
Ch. 6
4 (Feb 17)
Valuation of bonds and stocks
Ch. 8, 9
5 (Feb 24)
Risk and return, CAPM
Ch. 10, 11
6 (March 3)
Cost of capital
Ch. 13
7 (March 17)
Capital structure, business valuation
Ch. 16, 17, 18
8 (March 24)
Issuing securities to the public; mergers and acquisitions
Ch. 20, 29; course notes
9 (March 31)
Test; case analysis and term project
Course notes
10 (April 7)
Case 1. IPO valuation
JetBlue IPO
11 (April 14)
Case 2. M&As
Flinder Valves and Control
12 (April 28)
Project presentation
4