Corporate Finance II: Financing Investments and Managing Risk from Coursera

In this course you will learn how companies decide on how much debt to take, and whether to raise capital from markets or from banks. You will also learn how to measure and manage credit risk and how to deal with financial distress. You will discuss the mechanics of dividends and share repurchases, and how to choose the best way to return cash to investors. You will also learn how to use derivatives and liquidity management to offset specific sources of financial risk, including currency risks. Finally, You will learn how companies finance merger and acquisition decisions, including leveraged buyouts, and how to incorporate large changes in leverage in standard valuation models.

Upon successful completion of this course, you will be able to:

• Understand how companies make financing, payout and risk management decisions that create value

• Measure the effects of leverage on profitability, risk, and valuation

• Manage credit risk and financial distress using appropriate financial tools

• Understand the links between payout policies and company performance

• Use derivatives and liquidity management to offset financial risks

• Pick an appropriate financing package for an M&A or leveraged buyout deal

This course is part of the iMBA offered by the University of Illinois, a flexible, fully-accredited online MBA at an incredibly competitive price. For more information, please see the Resource page in this course and onlinemba.illinois.edu.

What's inside

Syllabus

Course Orientation

You will become familiar with the course, your classmates, and our learning environment. The orientation will also help you obtain the technical skills required for the course.

Module 1: Raising Financing: The Capital Structure Decision

In Module 1, we will discuss the differences between debt and equity financing for corporations. We will then learn how to avoid usual mistakes that people make when analyzing the choice between debt and equity. We will work with financial statements to understand the impact of higher debt on corporate profits, and we will learn how debt and risk are fundamentally related. Finally, we will use our knowledge to understand how companies choose how much debt to have.

Module 2: Understanding Debt Financing and Payout Policy

In Module 2 we will dig deeper into the mechanics and the institutional details that are important to understand debt financing. We will learn models that allow us to link default probabilities to yields on a company’s debt. We will discuss the roles of credit ratings for debt markets and for companies. We will learn the importance of non-price contractual terms such as debt covenants, collateral, and seniority. We will use this knowledge to understand how companies choose between bank debt and bond financing. Finally, we will discuss how payout decisions (dividends and share repurchases) affect firm value and how companies choose their optimal payout policy.

Module 3: Risk Management

In Module 3 we will identify good and bad reasons why companies engage in risk management, or hedging. We will learn the mechanics of how to use derivatives such as forwards and futures to eliminate specific risks. We will also discuss how to manage risks that cannot be hedged with derivatives. In particular, we will learn that appropriate liquidity management can work as a substitute for hedging strategies. We will also discuss how and why to hedge currency risk, and how to think about a company’s cost of capital when making cross-border investments.

Module 4: Finance, Governance, and Society

In Module 4, we will apply our knowledge on how to discount future cash flows to challenging situations. First, we learn how the presence of debt can result in acceptance of negative NPV projects (overinvestment, excessive risk taking). Then, we learn how debt can result in the rejection of positive NPV projects (underinvestment). Next, we will learn that NPV of the firm can differ from NPV for society, and how this may explain firms’ decisions to make bribe payments even though corruption is detrimental to welfare. Last, we examine situations where the NPV equation does not hold and what this means for society.

Course Conclusion

You will find out where to go next after completing this course and be able to share any thoughts you have on this course experience.

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Teaches financial decision-making for value creation by companies

Helps learners measure and manage credit risk

Develops skills in assessing and mitigating financial risks

Taught by skilled instructors, Heitor Almeida and Stefan Zeume

Examines essential topics for financial managers

May need prerequisites in finance

Reviews summary

Corporate finance course

According to students, this Corporate Finance course is highly complex but valuable for individuals seeking careers in investment banking. Reviews mention that the course covers complicated material but offers useful knowledge.

Learners found the course useful for those seeking a career in investment banking.

"very useful if you want to work in IB."

Reviews noted that the course material is very complicated.

"very complicated stuff to understand and master."

Career center

Learners who complete Corporate Finance II: Financing Investments and Managing Risk will develop knowledge and skills that may be useful to these careers:

Financial Analyst

As a Financial Analyst, you will evaluate and make recommendations on potential investments. To succeed in this role, it is important to have a strong understanding of how companies make financing, payout, and risk management decisions. The Corporate Finance II: Financing Investments and Managing Risk course will help you build a foundation in these areas. You will learn how to analyze the impact of debt and equity financing on corporate profits and risk, and how to use derivatives and liquidity management to offset financial risks.

See salaries and explore the career path for Financial Analyst

Investment Banker

As an Investment Banker, you will provide advice to companies on mergers and acquisitions, capital raising, and other financial transactions. To be successful in this role, you need to have a deep understanding of corporate finance and the ability to analyze complex financial data. The Corporate Finance II: Financing Investments and Managing Risk course will help you develop the skills and knowledge you need to succeed as an Investment Banker. You will learn about the different types of financing available to companies, how to evaluate the risks and rewards of different investment opportunities, and how to structure and execute complex financial transactions.

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Portfolio Manager

As a Portfolio Manager, you will manage investment portfolios for individuals and institutions. To be successful in this role, you need to have a strong understanding of financial markets and the ability to make sound investment decisions. The Corporate Finance II: Financing Investments and Managing Risk course will help you develop the skills and knowledge you need to succeed as a Portfolio Manager. You will learn about the different types of financial assets, how to analyze their risk and return characteristics, and how to construct and manage investment portfolios.

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Credit Analyst

As a Credit Analyst, you will assess the creditworthiness of companies and make recommendations on whether to lend them money. To be successful in this role, you need to have a strong understanding of corporate finance and the ability to analyze complex financial data. The Corporate Finance II: Financing Investments and Managing Risk course will help you develop the skills and knowledge you need to succeed as a Credit Analyst. You will learn how to analyze the financial statements of companies, how to assess their credit risk, and how to make lending decisions.

See salaries and explore the career path for Credit Analyst

Risk Manager

As a Risk Manager, you will identify and manage financial risks for companies. To be successful in this role, you need to have a strong understanding of financial markets and the ability to develop and implement risk management strategies. The Corporate Finance II: Financing Investments and Managing Risk course will help you develop the skills and knowledge you need to succeed as a Risk Manager. You will learn about the different types of financial risks, how to measure and manage them, and how to develop and implement risk management strategies.

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Corporate Treasurer

As a Corporate Treasurer, you will manage the financial resources of a company. To be successful in this role, you need to have a strong understanding of corporate finance and the ability to make sound financial decisions. The Corporate Finance II: Financing Investments and Managing Risk course will help you develop the skills and knowledge you need to succeed as a Corporate Treasurer. You will learn about the different types of financing available to companies, how to manage cash flow, and how to make investment decisions.

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Financial Consultant

As a Financial Consultant, you will provide financial advice to businesses and individuals. To be successful in this role, you need to have a strong understanding of corporate finance and the ability to communicate complex financial concepts to clients. The Corporate Finance II: Financing Investments and Managing Risk course will help you develop the skills and knowledge you need to succeed as a Financial Consultant. You will learn about the different types of financial services available, how to analyze financial data, and how to make financial recommendations.

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Auditor

As an Auditor, you will examine the financial records of companies and express an opinion on the fairness of their financial statements. To be successful in this role, you need to have a strong understanding of accounting and auditing principles. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as an Auditor. You will learn about the different types of financial instruments and how they are accounted for. You will also learn about the risks associated with different types of financial transactions.

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Tax Accountant

As a Tax Accountant, you will prepare and file tax returns for businesses and individuals. To be successful in this role, you need to have a strong understanding of tax laws and regulations. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as a Tax Accountant. You will learn about the different types of taxes that businesses and individuals are subject to, and how to calculate and file tax returns.

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Financial Planner

As a Financial Planner, you will help individuals and families plan for their financial future. To be successful in this role, you need to have a strong understanding of financial planning principles and the ability to communicate complex financial concepts to clients. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as a Financial Planner. You will learn about the different types of financial products and services available, and how to create and implement financial plans.

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Real Estate Agent

As a Real Estate Agent, you will help clients buy, sell, and rent real estate. To be successful in this role, you need to have a strong understanding of the real estate market and the ability to negotiate contracts. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as a Real Estate Agent. You will learn about the different types of real estate investments and how to finance them.

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Insurance Agent

As an Insurance Agent, you will sell insurance policies to businesses and individuals. To be successful in this role, you need to have a strong understanding of insurance products and the ability to communicate complex insurance concepts to clients. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as an Insurance Agent. You will learn about the different types of insurance policies available and how to assess the risks associated with different types of businesses and individuals.

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Loan Officer

As a Loan Officer, you will evaluate loan applications and make lending decisions. To be successful in this role, you need to have a strong understanding of credit analysis and the ability to assess the risks associated with different types of loans. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as a Loan Officer. You will learn about the different types of loans available and how to assess the creditworthiness of borrowers.

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Stockbroker

As a Stockbroker, you will buy and sell stocks and other securities for clients. To be successful in this role, you need to have a strong understanding of the stock market and the ability to analyze investment opportunities. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as a Stockbroker. You will learn about the different types of stocks and other securities available and how to evaluate their risks and rewards.

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Actuary

As an Actuary, you will use mathematical and statistical techniques to assess risks and develop insurance and investment products. To be successful in this role, you need to have a strong understanding of mathematics and statistics, as well as a deep knowledge of insurance and investment principles. The Corporate Finance II: Financing Investments and Managing Risk course may be helpful to you as an Actuary. You will learn about the different types of risks that businesses and individuals face, and how to develop insurance and investment products to mitigate these risks.

See salaries and explore the career path for Actuary