DEPARTMENT OF ECONOMCS

UNIVERSITY OF DELHI

Subject: Common Pool of GE (GE-14)

Sem.: V/VII
Course & Code: Corporate Finance, Governance and Development – ECON067
Duration (per week): 3 lectures + 2 Tutorial
Date & Time 05/08/2024 at 03:00 PM
Venue: 106, Department of Economics, Delhi University
Convenor: Satyendra Gupta

College Teachers
Anil Kumar (Dyal Singh College)
Dr. Animesh Naskar (Hansraj College)
Dr. Amit Nandan (Motilal Nehru College)
Madhurendra Singh (Dyal Singh College)
Chhavi Gautam (SRCC)

The convenor welcomed all the members to the meetings.

Following points were discussed and agreed upon.
 Eligibility criteria: All members agreed to replace the ‘Class 12th with Mathematics’ as
the eligibility to ‘Class 12th’. However, the respective teachers will take some tutorials to
explain basics of mathematics that may be required in relevant sections of the syllabus.
 Prerequisite: All members agreed to remove any prerequisites.
 Number of hours for the Unit I to IV are restructures as 07 (Unit I), 18 (Unit II), 12 (Unit
III), and 08 (Unit IV).
 Final examination (90) will have 7 questions. The students need to attempt any 5
questions (5 * 18). A scientific calculator will be allowed during the examination.
 Suggested pattern for the 7 questions from units I – IV is 1 + 3 + 2 + 1.
 Other assessment (e.g. continuous assessment, internal assessment) will be as per
university rules and guidelines.
Note: Examination scheme and mode shall be as prescribed by the Examination Branch,
University of Delhi, from time to time.
Learning Objectives
The Learning Objectives of this course are as follows:
 This course covers the important financial decisions that face companies and corporate
world in the modern economies.
 This will cover investment, financing and dividend decisions, together with the
management of risk.

Learning outcomes
The Learning outcomes of this course are as follows:
 The students will be able to under the risk and decisions taken by the corporate world in
the present-day situations.
 The student will learn the practical issues of assets formation in the share and equity
markets.
 They will also learn the role of institution in regulating uncertain and risky behaviours of
the corporate firms.

Syllabus
UNIT I: Investment decisions (07 hours)
Traditional methods of investment appraisal, Investment–consumption decision model, The
discounted cash flow approach, Net present value and internal rate of return, Capital rationing

UNIT II: Risk analysis (18 hours)

Simple risk techniques, Risk and return, Portfolio theory, The capital asset pricing model,
Option valuation

UNIT III: Financing decisions (12 hours)

Financial markets, the cost of capital, Weighted average cost of capital, Capital structure in a
simple world, Capital structure in a complex world, Investment and financing interactions

UNIT IV: International issues (08 hours)

Foreign exchange, Foreign exchange hedging, Foreign direct investment

Recommended readings
 Brealey, Richard, A., Myers, Steward C., Allen, Franklin; “ Principles of Corporate Finance” 13th
Edition 2020
 Lumby, S., & Jones, C. (2019). Corporate finance: Theory & practice. 10th edition.
Cengage Learning EMEA.

Detailed Reading List

Unit Names Name of the Topics Page No.
Unit-I: Investment Decision Traditional Methods of Chapter-5 Brealey, Richard,
Investment Appraisals A., Myers, Steward C., Allen,
The Discounted CashFlow Franklin; “ Principles of
Approach, NPV,IRR, Capital Corporate Finance” 13th
Rationing Edition, 2020 Page-108-134
Investment Consumption Chapter-4 Steve Lumby &
Decision Model Chris Jones, “ Corporate
Finance Theory & Practice”
10th Edition.2022 Page: 45-60
Unit-II: Risk Analysis Risk and Return Chapter-10 Steve Lumby &
Chris Jones, “ Corporate
Finance Theory & Practice”
10th Edition.2022 Page: 195-
215
Portfolio Theory Chapter-11 Steve Lumby &
Chris Jones, “ Corporate
Finance Theory & Practice”
10th Edition. 2022 Page: 216-
245
The Capital Asset Pricing Chapter-11 Steve Lumby &
Model Chris Jones, “ Corporate
Finance Theory & Practice”
10th Edition. 2022 Page: 246-
257 and Exercise (page 277-
280)
Option Valuation Chapter-11 Steve Lumby &
Chris Jones, “ Corporate
Finance Theory & Practice”
10th Edition.2022 Page:281-
311 and Exercise(page 315-
318)
Unit-III: Financing Decisions Financial Markets Chapter-15 Steve Lumby &
Chris Jones, “ Corporate
Finance Theory & Practice”
10th Edition. Page: 347-357,
An Overview of Corporate Chapter-14 Brealey, Richard,
Financing A., Myers, Steward C., Allen,
Franklin; “ Principles of
Corporate Finance” 13th
Edition2020 Page-365-390
Chapter-16 Brealey, Richard,
A., Myers, Steward C., Allen,
Franklin; “ Principles of
 Corporate Finance” 13th
Edition2020 Page-425-443
Chapter-17 Brealey, Richard,
A., Myers, Steward C., Allen,
Franklin; “ Principles of
Corporate Finance” 13th
Edition, 2020 Page-451-468
Unit IV International Issues Foreign Exchange, Foreign Chapter-22, 23 & 24 Steve
Exchange Hedging & Foreign Lumby & Chris Jones, “
Direct Investment Corporate Finance Theory &
Practice” 10th Edition. Page:
534-579