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financefixit.com
Applied Corporate Finance:
Links:
giddy.org
giddyonline.com
financefixit.com
globalsecuritization.com
asiansecuritization.com
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financefixit.com
Seminar on Applied Corporate Finance
Prof. Ian Giddy
New York University
Goals
This 2-day applied finance module will offer an insight into applied
corporate and investment finance with the objective of
identifying
and solving corporate finance problems using the latest practical and
analytical techniques. Using real-world case studies for participants to
work cooperatively on, the course will introduce the key principles of
selecting financial and real investments, financing them, extracting value
and managing financial risk.
Beginning with the premise that the goal of management is to increase
the value of the firm or financial institution, 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 investments
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. 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, and currency risk.
The seminar will conclude with an analysis of how companies can improve
value and profitablity
Instructor
Prof. Ian Giddy
lectures on finance at New york University's Stern School of Business.
He is a graduate of the University of Michigan (MBA 1972, PhD 1974) and
the University of the Witwatersrand (BSc 1970). He has taught finance at
NYU, Columbia, Wharton, Chicago and abroad for the past twenty-two years.
He was Director of International Fixed Income Research at Drexel Burnham
Lambert from 1986 to 1989. He is the author or co-author of numerous articles
and books, including
The Handbook of International Finance, The
International Money Market, Cases in International Finance,
Global
Financial Markets, Asset Securitization in Asia and
The Hudson
River Watertrail Guide.
Course Structure and Highlights
Day 1
Morning:
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Applied corporate finance
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The decisions that create shareholder value: Investment, financing, payback
and risk management
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Economic Value Added and related concepts
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The goals and constraints of financial managers
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Managers’ vs Owners’ Interests: The Agency Problem
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Corporate Governance and the Market for Corporate
Control
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Evaluating Investments and the Cost of Capital
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Risky investments and the cost of capital
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Capital asset pricing model and a company's beta
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How to measure a company's cost of equity
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How to find a company's cost of capital
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Application to investment evaluation
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Time Value of Money
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Risk Value of Money
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Making Real Investment Decisions
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Capital Budgeting
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The International Dimension
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In-Depth Case Study
Afternoon:
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Principles of Corporate Financing
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Finding the optimal capital structure: debt, equity or mezzanine?
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Corporate taxation and capital structure
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Leverage, ratings and the cost of debt
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How to find the optimal debt ratio
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Case Study: SAP Company
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Designing Debt
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From "How Much Debt?" to "What Kind of Debt?"
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Public vs private; domestic vs international; long-term vs short term;
fixed vs floating
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Currency of denomination
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Hybrid debt instruments
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Case Study: Financing Ciba
Day 2
Morning
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Risk Management: Corporate Applications
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When Should Companies Actively Hedge Financial Risks?
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Defining and Measuring Financial Risk
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Measuring Foreign Exchange Exposure
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Managing Foreign Exchange Exposure
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Tools and Techniques of Hedging: Derivatives such
as Futures, Options and Swaps
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Case Study: Paretti Textiles
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What Can Go Wrong, and Why
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Interest rate risk management
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Commodity price risk management
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Hedging using derivatives and structured notes
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Case study: LQM
Afternoon:
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Creating corporate value through financial restructuring
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Use of leverage and equity transitions
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Principles of merger, acquisition and divestiture restructuring
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Company research and valuation based on financial statement analysis and
understanding the business and competitive situation, cost structure, etc.
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Bringing an IPO deal to market
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The corporate financing choice: Debt, equity or mezzanine?
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Structure and use of the international equity and bond markets
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Bank financing, bonds, common stock vs convertibles, warrants, index-linked
securities, etc
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Financing and corporate volatility
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Case Study: Rinol
Recap and summary of the seminar
Background Materials
Background Materials on Corporate Finance may be found at the
following website:
http://giddy.org/ibmfinance/finmat.htm
Excel spreadsheets for Corporate Finance and Valuation may be
found at:
http://giddy.org/ibmfinance/spreadsheets.htm
A sample Excel spreadsheet for the valuation of a merged company
may be found at:
http://giddy.org/dbs/ipoh.xls
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