FNCE30002 : Corporate Finance

20% Mid-Semester Test, 10% Tutorial Participation, 70% Final Exam

Man, where do I start with Corporate Finance. I think among Finance students that, generally, this is regarded as the easiest 3rd year finance subject. Personally I found corporate finance to be slightly harder than investments (however that may just be due to the people I took it under). Corp fi piles on a lot of content - and while it isn't conceptually difficult, there is a lot of it. The first 4 weeks and final 3 are the major weeks in the subject, and Sean is pretty cool that he calms down the content during the middle of the semester because (well I assume) that everyone is up to their eyeballs in assessments and tests and stuff.

So, for the overall lectures and content. Sean is actually a beast lecturer. He does these 'TAPPS' things in the lecture that he puts up a question and asks you to solve it with the person next to you - 'Think Aloud Pair Problem Solving'. So not only do you get forced to meet a new person, but these questions actually are pretty crucial. They popped up in the exam and potentially the midsem (can't quite remember). The subject itself covers a range of topics from IPO's, Seasoned Equity Offerings, Capital Structure, Payout Policy to some more advanced capital budgeting techniques (i.e. think Constant Chain of Replacement for project evaluation) which extends into some quite conceptual real options analysis and the subject concludes with a few weeks on Takeovers, Corporate Restructuring and Risk Management. A lot of the content early in the course I recognised from Business Finance, there was quite a big focus on the implications of the MM propositions so it helped that I remembered, even just slightly, what they were. However, they don't really get tested and mainly just set the scene for the analysis done in class. Sean does lectures quite well because he also includes empirical evidence to support all of the content. And while to the dismay of some students, this was examinable (and was definitely examined), I thought it added another perspective and really helped me grasp what we're learning. I also do think it's cool that you get to see that managers/management themselves will answer surveys about their job in ways that prove either agency problems (empire building etc) or that they think proven techniques are too complex. Overall the lectures and content I really enjoyed. I'm quite biased towards finance in general so I enjoy most of the subjects, but learning about these things brought a smile to my face. Oh and Sean brings in guest lecturers for 3 weeks for half the lecture. I believe our guest lecturers were from Citi, JP and somewhere else? What they say isn't examinable but, again, it's cool and adds another dimension.

Tutorials were alright. I had Vee as my tutor and I swear if you have the opportunity to get her, do it. God damn she did fantastic mind maps of the whole course and told you what you need to know and didn't mess around, it was awesome. Tutorial participation is worth 10% and just involves handing up a reasonable attempt at the questions - easy enough and most people would have gotten 10/10. The content, unlike some other subjects, and questions covered in tutorials are very similar to the type of questions you'll see on the mid semester and exam so it's definitely worth writing down notes etc to make sure you understand. There's not really much else to say with tutorials, they were actually quite helpful which was refreshing.

Assessment! The mid-semester test was 23 questions held in week 5 or 6 and covered the first 4 topics. Unfortunately these were the really heavy content weeks so it did take a fair bit of studying to make sure you knew everything in and out. I'm not sure what the average was except that it was 1 mark higher in one of the streams so the other stream got their whole mid-sem marked up by 1 - fair enough I suppose, just spewing that I was in the wrong one. There were a few tricky questions simply because a lack of specification but overall I don't think it was crazy and the average would've been quite high. I would say, know your tax systems and implications of the imputation tax system and know in depth of when/why firms may use Private Placements or Rights Issue and what this means for shareholder wealth.

The exam...The exam...I'm not sure how I feel about the exam (mainly because I performed poorly) - it consists of 20 MCQ, 10 T/F with explanations and 4 Short-Answer questions. I thought it was very fair, and the MCQ weren't designed to trick people (or maybe I just didn't realise any of the tricks). One complication that people may have stuffed up on is that Sean writes all his MCQ with a 'More than one option is correct' or 'No option is correct' option - so you have to read the whole question and all the answers to make sure you get it right. The True and False, again, were generally fair. I don't think there was too much there that if you had studied all the lecture slides you wouldn't know. The key is being able to explain your reasoning clearly (and also note the TAPPS popped up here). The short answer I think is where they tried to separate students - we had a quite long question on a real options analysis which was confusing to say the least. While we did have a lecture on real options analysis, I think we covered the bare basics and you would need to do some additional research (Sean put up an article for that week's reading which substantially helped) to make sure you fully understand it.We also had a long question on Takeovers and share bids; although that wasn't too bad if you knew the takeovers lecture. For the exam, I would definitely say know the intricacies of the takeovers financial evaluation formulas (e.g. what does Net Cost actually signify -> amount paid over the value of the target operating as an independent entity -> which is another word for control premium!) and potentially how real options analysis can be used in different ways. We only received 1 practice exam from Sean but it did give a good insight in to what the exam might look like and it definitely helped. As, I suppose, a reward for the mid-sem only 16 marks of 100 are allocated to the first 4 topics - 4 marks each topic. I think it's a good thing to reward students but it meant that you did have to go back and revise the entire first 4 weeks cause who knows what part those marks will be on. But generally speaking I would just go back and learn the key points (Rights issue v Private Placement, What assets are likely to be leased, Non-tax impacts on capital structure etc etc - all those sort of minor but key points).
Overall I really enjoyed the subject and it has to go down in my books as one of my favourites. Enthusiastic and knowledgeable teaching staff made sure that I understood the content which goes along way to helping your learning.

Yes

Sean Pinder

Yes, 1 available.

5 out of 5

Same textbook that is used for Business Finance. If you want to be at the very high end of the bell curve you will need it for the readings, but the tutorial questions are also in the textbook.

1x2 Hour Lecture and 1x1 Hour Tutorial

2017 Semester 2

TBA