AØKA08012U Corporate Finance and Incentives (F,p)
MSc programme in Economics – elective course
The course is part of the Financial line at the MSc programme in Economics, symbolized by ‘F’.
Bacheloruddannelsen i økonomi – Prioriteret valgfag på 3. år (angivet med et p)
The Danish BSc programme in Economics - prioritized elective at the 3rd year (symbolized by ‘p’).
MSc programme in mathematics-economics
This is the Economics programme’s central course on Finance, giving a broad insight into the core matter of the field. Building on earlier relevant courses from the Bachelor’s programme in Economics, it provides the common ground for later elective Finance courses.
The course develops your understanding of the different asset classes in financial markets, including bonds, stocks, forwards, futures and options. Based on considerations of investor demand, standard asset pricing methods are introduced. Market efficiency and investor behaviour in this context is discussed. The pricing methodology is used to analyse the choice of investment projects inside firms, including the management of real options. Turning to classic corporate finance issues, the course explores the optimal capital structure of the firm, its optimal dividend policy, risk management, and the incentives of the firm’s management.
The asset pricing models include the Capital Asset Pricing Model (CAPM), the Arbitrage Pricing Theory (APT), risk-neutral pricing, and the Black-Scholes formula. Excel is used to solve problems in these areas.
After completing the course the student is expected to be able to:
- Identify, describe and discuss financial problems encountered by firms and investors.
- Account for and understand the core models and methodologies in the field of Financial Economics.
- Define the core concepts of Financial Economics.
- Criticize and reflect upon the main models in Finance, relating them to current issues in financial markets and corporate finance.
- Select and apply core models and methodologies to analyse standard problems in Finance, partly using Excel.
- Master the analysis of given problems, assessing models and results, putting results into perspective.
- Argue about financial problems and issues in a scientific and professional manner, drawing upon the relevant knowledge of the field.
- Bring into play the achieved knowledge and skills on new formal problems.
- Select and evaluate solutions to complex, unpredictable situations in financial markets or corporations.
- Approach more advanced models, methodologies and topics in Finance.
The main textbook for the course:
Jonathan Berk and Peter DeMarzo: Corporate Finance, Fifth Edition, Global Edition, Pearson.
Some supplementary shorter texts and current media clippings are supplied through Absalon.
Peter Norman Sørensen (2019): "Lecture Notes on Asset Pricing," available through Absalon.
It is recommended to have followed the course "Probability Theory and Statistics" (Sandsynlighedsteori og Statistik) at the Bachelor of Economics, or similar, before attending the course.
It is recommended to have followed the courses Microeconomics I and II at the Bachelor of Economics, or similar, before attending the course.
The student will benefit from attending the course Microeconomics III at the Bachelor of Economics before or at the same time as the course.
This course also offers exercise classes meeting every week. Weekly exercise sets will become available through Absalon.
It is expected that students consider how to solve the exercises before the class meets. Problem solving helps to realize which parts of the syllabus are harder to learn, so working with the exercises provides the best chance to deeply understand the course material.
The lecturer offers office hours. When and where will be informed by the lecturer.
3 hours lectures a week from week 36 to 50 (except week 42).
2 hours exercise classes a week from week 36/37 to 50 (except week 42).
The overall schema for the BA 3rd year and Master can be seen at KUnet:
MSc in Economics => "Courses and teaching" => "Planning and overview" => "Your timetable"
BA i Økonomi/KA i Økonomi => "Kurser og undervisning" => "Planlægning og overblik" => "Dit skema"
Timetable and venue:
To see the time and location of lectures and exercise classes please press the link/links under "Timetable"/"Se skema" at the right side of this page. E means Autumn. The lectures are shown in each link.
You can find the similar information partly in English at
-Select Department: “2200-Økonomisk Institut” (and wait for respond)
-Select Module:: “2200-E20; [Name of course]”
-Select Report Type: “List – Weekdays”
-Select Period: “Efterår/Autumn – Weeks 31-5”
Press: “ View Timetable”
Please be aware regarding exercise classes:
- The schedule of the exercise classes is only a pre-planned schedule and can be changed until just before the teaching begins without the participants accept. If this happens it will be informed at the intranet or can be seen in the app myUCPH and at the above link
- That the study administration allocates the students to the exercise classes according to the principles stated in the KUnet.
- If too many students have wished a specific class, students will be registered randomly at another class.
- It is not possible to change class after the second registration period has expired.
- If there is not enough registered students or available teachers, the exercise classes may be jointed.
- The student is not allowed to participate in an exercise class not registered, because the room has only seats for the amount of registered student.
- The teacher of the exercise class cannot correct assignments from other students than the registered students in the exercise class except with group work across the classes.
- That all exercise classes will be taught in English.
- Class Instruction
The teaching assistants give the students individual feedback at their mandatory assignments.
The lecturer gives collective oral feedback at the quizzes the students make in the lectures.
For foreign students not enrolled: Admission requirements, registration etc: Study Economics.
For gæste- og enkelfagsstuderende: Tilmelding via Uddannelse i Økonomi.
- 7,5 ECTS
- Type of assessment
- Written examination, 3 hours under invigilationThe exam assignment is given in English and must be answered in English.
- Exam registration requirements
To qualify for the exam the student must during the semester and not later than the given deadlines
- hand in and have approved 3 out of 4 mandatory assignments.
- Without aids
- Marking scale
- 7-point grading scale
- Censorship form
- No external censorship
for the written exam. The exam may be chosen for external censorship by random check.
- Exam period
The exam takes place in the exam venues of the university:
18 December 2020
The exact time and room will be available in the Digital Exam from the middle of the semester.
In special cases, the exam date can be changed to another day and time within the exam period.
The written reexam takes place in the exam venues of the university:
19 February 2021
NOTE: If only a few students register for the written re-exam, it might change to a 20 minutes oral exam with 20 minutes preparation time. No aids allowed during the preparation and also not during the examination.
If changed to an oral exam, the date, time and place change as well, which will be informed by the Examination Office.
In Digital Exam early February.
Criteria for exam assesment
Students are assessed on the extent to which they master the learning outcome for the course.
To receive the top grade, the student must with no or only a few minor weaknesses be able to demonstrate an excellent performance displaying a high level of command of all aspects of the relevant material and can make use of the knowledge, skills and competencies listed in the learning outcomes.