This course "Fundamentals of Corporate Finance" is about how effectively financial resources are raisedand used in a business corporation. It helps students to learn effective management of financial resources ina corporate firm and equips them with the necessary skills to do so. This course includes the introduction to corporate finance, short-term financing, terms loan and lease financing, long-term financing, hybrid financing - preferred stock, warrants and convertibles, capital structure decision, financial planning andforecasting, international corporate finance and merger and acquisition.

This course "Fundamentals of Corporate Finance" aims to provide students with basicunderstandings of fundamental concepts and principles of corporate finance. This course also equips the students with fundamental concepts, tools, techniques, and theories of corporate financialmanagement which helps to prepare them to resolve complex financial issues of corporate firms.

Unit 1: Introduction to Corporate Finance ( LH 15) 
Corporate finance and financial manager; Financial manager’s responsibilities; Managerial actionsto maximize shareholder wealth; Corporate finance and other functional areas; The agencyproblem: stockholders versus managers and stockholders versus creditors; Ethics in financial decisions; Corporate governance and corporate social responsibilities.

Unit 2: Short-Term Financing (LH 20) 
Nature of short-term financing; Advantages and disadvantages; Sources of short-term financing:accruals, accounts payable (trade credit), commercial paper, short-term bank loans – line of credit,revolving credit arrangement, transaction loans; Choosing a bank; Comparison of cost of tradecredit, commercial paper, and short-term bank loan; Use of security in short-term financing:inventory financing and accounts receivable financing; Factors affecting in choosing theappropriate sources of short-term financing.

Unit 3: Term Loans and Lease Financing (LH 15) 
Term Loans: Concept, cost and benefits, loan repayment schedule; Lease financing: concept,merits and demerits of lease financing, forms of lease financing, Analysis of lease versus
buy/borrow decision using present value of cash flow approach; Lease financing in Nepal.

Unit 4: Long-Term Financing (LH 20) 
Long term debt: Debt instruments, Features of long-term debts; Types of bonds; Bondinnovations; Advantages and disadvantages of bonds; Common stock: Features ofcommonstock; Legal rights and privileges of common stockholders; Advantages and disadvantages ofcommon stock; Methods of selling securities: public offering, rights offering and privateplacement; Analysis of rights offering and effect of rights offering on shareholders’ wealth;The investment banks and investment banking process; Ranking of different types ofsecurities.

Unit 5: Hybrid Financing: Preferred Stock, Warrants and Convertibles (LH 15) 
Preferred stock: Features and advantages and disadvantages; Warrants, reasons for usingwarrants, value of warrants, warrant premium; Convertibles, reasons for using convertibles,
conversion ratio, conversion price, conversion value, straight bond value, minimum price ofand conversion premium.

Unit 6: Financial Planning and Forecasting (LH 15) 
Strategic planning; Operating plan and the financial plan; Sales forecast; Additional fund neededequation; Forecasted financial statements; Using regression to improve forecasts; Analyzing theeffects of changes in ratios.

Unit 7: Capital Structure Decision (LH 10) 
Capital structure and financial structure; Determining the optimal capital structure; The effect ofcapital structure on stock prices and the cost of capital; Capital structure and value of the firm.

Unit 8: International Corporate Finance (LH 20) 
Nature of multinational corporations; Reasons for companies going global; Multinational versusdomestic financial management; Exchange rates quotations; Cross rates; Interbank foreigncurrency quotations; Trading in foreign exchange rates: spot rates and forward rates; Interest rateparity; Purchasing power parity; Inflation, interest rates, and exchange rates; International moneyand capital markets; International capital budgeting; and International capital structure.

Unit 9: Merger and Acquisition (LH 10) 
Rationale for mergers; Types of mergers; Level of merger activity; Hostile versus friendlytakeovers; Merger analysis; Role of investment bankers; Corporate alliances; and Private equityinvestments.