CORPFIN 2502 - Business Valuation II
North Terrace Campus - Semester 2 - 2018
General Course Information
Course Code CORPFIN 2502 Course Business Valuation II Coordinating Unit Business School Term Semester 2 Level Undergraduate Location/s North Terrace Campus Units 3 Contact Up to 3 hours per week Available for Study Abroad and Exchange Y Prerequisites CORPFIN 1002 Course Description This course will provide the framework to price and value both securitised and non-securitised entities (whether that be specific assets or whole companies). This involves the utilisation of both accounting and financial analysis of the entity to determine value. The course will approach the subject from an applied viewpoint to enable participants to practise valuation methods. The course will also incorporate basic capital raising issues, from both the fixed income and equity perspectives.
Course Coordinator: Dr Paskalis Glabadanidis
The full timetable of all activities for this course can be accessed from Course Planner.Week 1 (Topic 1) Syllabus/Introduction to Valuation, DCF, Relative Valuation, Contingent Claim Valuation
Week 2 (Topic 2) Estimating Discount Rates
Week 3 (Topic 3) Measuring Cash Flows
Week 4 (Topic 4) Forecasting Cash Flows
Week 5 (Topic 5) Equity Valuation Models
Week 6 Aug 28 Test 1 (Bonython Hall) 2pm-3pm
(Topic 6) Firm Valuation Models (Lecture Theatre) 3pm-4pm
Week 7 (Topic 7) Relative Valuation: First Principles
Week 8 (Topic 8) Relative Valuation: Equity Multiples
Week 9 (Topic 9) Relative Valuation: Value Multiples
Week 10 (Topic 10) Introduction to Options, Options Strategies and Payoffs
Week 11 Oct 16 Test 2 (Lecture Theatre) 2pm-3pm
(Topic 10 Cont'd) Binomial Option Pricing 3pm-4pm
Week 12 (Topic 11) Valuing Equity/Debt in the Option Pricing Framework, Real Option Valuation, Bond Valuation
Week 13 (if needed) Exam Overview
Course Learning OutcomesOn successful completion of this course, students will be able to:
1. Conduct valuations based on the discounted cash flow method.
2. Conduct a relative valuation for a company.
3. Recognize conflicts of interest in valuation contexts
4. Critically analyse publically available information about what is occurring in financial markets.
5. Demonstrate a basic understanding of the fixed income securities market
University Graduate Attributes
This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:
University Graduate Attribute Course Learning Outcome(s) Deep discipline knowledge
- informed and infused by cutting edge research, scaffolded throughout their program of studies
- acquired from personal interaction with research active educators, from year 1
- accredited or validated against national or international standards (for relevant programs)
1-5 Critical thinking and problem solving
- steeped in research methods and rigor
- based on empirical evidence and the scientific approach to knowledge development
- demonstrated through appropriate and relevant assessment
1,2,5 Teamwork and communication skills
- developed from, with, and via the SGDE
- honed through assessment and practice throughout the program of studies
- encouraged and valued in all aspects of learning
3 Career and leadership readiness
- technology savvy
- professional and, where relevant, fully accredited
- forward thinking and well informed
- tested and validated by work based experiences
4 Intercultural and ethical competency
- adept at operating in other cultures
- comfortable with different nationalities and social contexts
- Able to determine and contribute to desirable social outcomes
- demonstrated by study abroad or with an understanding of indigenous knowledges
3 Self-awareness and emotional intelligence
- a capacity for self-reflection and a willingness to engage in self-appraisal
- open to objective and constructive feedback from supervisors and peers
- able to negotiate difficult social situations, defuse conflict and engage positively in purposeful debate
Required Resources(very useful) Textbook: Damodaran on Valuation, 2nd edition, 2006, John Wiley & Sons
Study Guide: Study Guide for Damodaran on Valuation, 1st edition, John Wiley & Sons.
(optional) Glabadanidis, Absence of Arbitrage Valuation: A Unified Framework for Pricing Assets and Securities, 2014, 1st ed., Palgrave Macmillan US. Also available from UniBooks.
Online LearningCourse Lecture notes as well as additional materials (data spreadsheets, etc.) will be made available on MyUni.
Learning & Teaching Activities
Learning & Teaching ModesStudent learning in this course consists of following lectures supported by problem-solving tutorials developing material covered in lectures.
The information below is provided as a guide to assist students in engaging appropriately with the course requirements.The University expects full-time students (i.e. those taking 12 units per semester) to devote a total of 48 hours per week to their studies. This means that you are expected to commit approximately 9 hours for a three-unit course or 13 hours for a four-unit course, of private study outside of your regular classes. Students in this course are expected to attend all lectures throughout the semester plus one tutorial class each week.
Learning Activities Summary
Lecture/Week 1 Topics
Syllabus/Introduction to Valuation
DCF, Relative Valuation, Contingent Claim Valuation
Lecture/Week 2 Topics
Estimating Discount Rates
Lecture/Week 3 Topics
Measuring Cash Flows
Lecture/Week 4 Topics
Forecasting Cash Flows
Lecture/Week 5 Topics
Equity Valuation Models
Lecture/Week 6 Topics
Test 1 (Bonython Hall 2pm-3pm)
Firm Valuation Models (Lecture Theatre 3pm-4pm)
Lecture/Week 7 Topics
Relative Valuation: First Principles (TBA)
Lecture/Week 8 Topics
Relative Valuation: Equity Multiples
Lecture/Week 9 Topics
Relative Valuation: Value Multiples
Lecture/Week 10 Topics
Option Valuation, Options Strategies and Payoffs, Binomial Option Pricing
Lecture/Week 11 Topics
Test 2 (Lecture Theatre 2pm-3pm) Valuing Equity/Debt in the Option Pricing Framework, Real Option Valuation
Lecture/Week 12 Topics
Introduction to Fixed Income Securities, Spot/Forward Interest Rates, Bond Valuation
Lecture/Week 13 Topics
(if needed) Final Exam Review
The University's policy on Assessment for Coursework Programs is based on the following four principles:
- Assessment must encourage and reinforce learning.
- Assessment must enable robust and fair judgements about student performance.
- Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
- Assessment must maintain academic standards.
Assessment SummaryAssessment in this class will consist of two tests each worth 30% of the final grade and a final examination worth 40% of the final grade. Neither tests nor the exam are redeemable. If a student misses one of the midterm tests due a valid and documented reason (eg, medical report) then the other test will have a weight of 45% and the final exam will have a weight of 55%. In the absence of a documented reason for missing a test or the exam a mark of zero will be assigned to the respective test/exam.
Assessment Task Weighting Learning Outcome Test 1 30% 1-5 Test 2 30% 1-5 Exam 40% 1-5 Total 100%
Assessment Related RequirementsWhile we are not going to keep attendance during tutorials it is highly advisable that you attend as many as you can. The more material you master during class/tutorial time, the less time you will have to spend studying on your own. Therefore, it is in your best interest to attend all lectures and tutorials for the class.
Consultation times are after the lecture on Tuesdays between 1pm and 2pm in the office (Nexus 12.31) of the lecturer in charge at the Nexus 10 building.
Assessment DetailThe assessment components are as follows:
Test 1 (Week 6) 30%
A 1 hour class test will be held in Week 6 on Tuesday, August 28, 2018 during the first half of the lecture block – 2pm-3pm in Bonython Hall. It will cover Discounted Cash Flow (DCF) Valuation up until Equity Valuation models (topics 1 through 5 inclusive). The test will be closed book but you can bring in a one-page two-sided A4 cheat sheet with your own notes, formulas, etc., hand-written or typed.
Course Learing Outcome: 1
Test 2 (Week 11) 30%
A 1 hour class test will be held in Week 11 on Tuesday, October 16, 2018 during the first half of the lecture block – time/location to be annoucened. It will cover Firm Valuation (DCF), Relative Equity Valuation models and Relative Firm Value models (topics 6 though 9 inclusive). The test will be closed book but you can bring in a one-page two-sided A4 cheat sheet with your own notes, formulas, etc., hand-written or typed.
Course Learing Outcome: 1
Final Exam 40%
There will be a 3 hour exam covering topics subsequent to the first test (topics 6 through 11 inclusive). You will not be allowed to bring in a cheat sheet to the final exam. A formula sheet will be supplied by the lecturer in charge.
Course Learing Outcome: All
SubmissionThe group business valuation report must be attached to a ‘Group Assignment Cover Sheet’, which must be signed and dated by all group members before submission. All team members are expected to contribute approximately equally to a group assignment.
Grades for your performance in this course will be awarded in accordance with the following scheme:
M10 (Coursework Mark Scheme) Grade Mark Description FNS Fail No Submission F 1-49 Fail P 50-64 Pass C 65-74 Credit D 75-84 Distinction HD 85-100 High Distinction CN Continuing NFE No Formal Examination RP Result Pending
Further details of the grades/results can be obtained from Examinations.
Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.
Final results for this course will be made available through Access Adelaide.
The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.
SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.
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