"fix the equity - fix the debt - fix the control"

Applied Corporate Finance:


Seminar on Applied Corporate Finance

This ten-day applied finance module will offer an insight into applied corporate and investment finance from the perspective of the corporate financial manager or the institutional investor. Beginning with the premise that the goal of management is to increase the value of the firm or financial insitution, we will walk through the key decisions - investment, financing and risk management - that contribute to shareholder value. The investment side will include equity and fixed-income portfolio selection and management decisions, capital budgeting under risk, and M&A. The financing side comprises decisions about capital structure - how much debt, relative to equity, is optimal for a particular firm - as well as decisions about what kind of debt, and what kind of equity, is right for the firm. From the perspective of a global firm, we will draw on the global capital markets. We will also consider how companies can return value to shareholders via the dividend and other "payback" strategies. Both investment and financing decisions are tied to financial risk management, including the choice of hedging instruments, so the third leg will offer guidelines for the measurement and management of interest rate, equity, commodity and currency risk. Using real-world case studies, the course will introduce the key principles of selecting financial and real investments, financing them, extracting value and managing financial risk. 

The module employs cases and problems as well as classroom lectures and discussions, negotiation and presentation exercises, computer-oriented assignments and "live case studies" drawing on Bloomberg, Rueters or the Internet, to offer a hands-on learning experience. 

Aswath Damodaran, Applied Corporate Finance, Wiley, 1999.
Ian Giddy, Global Financial Markets, Houghton-Mifflin, 1994
Additional case studues and readings will be made available in a readings package.

The Course on the Internet
We will make use of the Internet--notably the World Wide Web--for resource material and communication. Check this website for details.

Course Outline

Days  Topics 
2 Applied Corporate Finance 
Applied Portfolio Investment Management
3 Applied Financing in the Global Capital Market 
Applied Risk Management Using Derivative Products
1 Integration: Identifying and Solving Clients' Investment, Financing and Risk Management Problems
Total 10 days

Detailed Outline of Topics

  • Applied Corporate Finance
      • The Decisions that Create Shareholder Value
      • Investment, Financing, Payback and Risk Management
      • Managers’ vs Owners’ Interests: The Agency Problem
      • Corporate Governance and the Market for Corporate Control
      • The Emergence of Shareholder-Value Based Management in Europe
      • Economic Value Added and Related Concepts
      • Case Studies
    • Applied Portfolio Investment Management
      • Goals and constraints of institutional investors
      • The Risk-Return Tradeoff
      • Investment valuation and selection
      • Various equity and debt instruments and their role in portfolios
      • Principles of Portfolio Management
      • Capital Asset Pricing in a Shareholder-Diversified Context
      • Portfolio Diversification in an International Context
      • Case study and seller-buyer negotiation
    • Applied Financing in the Global Capital Market
      • Corporate Financing Decisions in the domestic and Euro markets
      • Structure and use of the international  equity and bond markets
      • Bringing a deal to market
      • The corporate financing choice: Debt, Equity or Mezzanine?
      • Common stock vs convertibles, warrants, index-linked securities, etc
      • Financing and Corporate Volatility
      • Case Study
      • From "How Much Debt?" to "What Kind of Debt?"
      • Public vs Private
      • Domestic vs International
      • Long-Term vs Short Term
      • Fixed vs Floating
      • Currency of Denomination
      • Asset-based and project financing
      • Applications of each
      • A framework for optimal use of the international capital and swap markets
      • Comprehensive negotiation-based case study
    • Applied Risk Management Using Derivative Products
      • When Should Companies Actively Hedge Financial Risks?
      • Defining and Measuring Financial Risk
      • Tools and Techniques of Hedging: Derivatives such as Futures, Options and Swaps
      • Portfolio insurance techniques
      • Swap financing techniques
      • Managing Foreign Exchange Exposure: transactions, accounting and economic exposure
      • What Can Go Wrong, and Why
      • Case Studies
    • Integration: Identifying and Solving Clients' Investment, Financing and Risk Management Problems
      • Integration of hedging and investment management
      • Integration of hedging and financing decisions

      • Comprehensive negotiation-based case study with presentations

    Background Materials
    Background Materials on Corporate Finance may be found at the following website:
    Excel spreadsheets for Corporate Finance and Valuation may be found at:
    A sample Excel spreadsheet for the valuation of a merged company may be found at:

    Related websites:

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    Go to Giddy's Web Portal • Contact Ian Giddy at