FINC2011 Corporate Finance I

How FINC2011 is assessed

The four numeric weights total 100%. The official Semester 2 2026 outline controls the current group-assignment date and identifies the final as a two-hour closed-book written exam. Use the current Canvas task and final exam instructions for operational details released for your sitting.

Current FINC2011 dates

Dates are as published in the official Semester 2 2026 unit outline and captured Canvas assessment page. Confirm exact deadlines and submission settings in the live LMS.

What FINC2011 covers

Seven evidence-rich chapters follow the captured teaching materials from finance decisions and time value of money through debt, equity, payout policy, and portfolio risk.

They then build the mathematics needed to move money across time, compare projects, price debt and equity, interpret dividend policy, and describe risk.

The central habit is consistent throughout: identify the decision, align the cash-flow date with the rate period, calculate with controlled precision, and state what the answer means.

How the topic sequence develops

The first topic distinguishes investment, financing, and dividend decisions and asks why managers may not always choose what diversified shareholders prefer.

Financial Mathematics I introduces timelines, present and future value, annuities, perpetuities, and net present value. Financial Mathematics II extends those tools to quoted and effective rates, different compounding frequencies, loans, deferred payments, and uneven streams.

Debt valuation then decomposes a bond into coupons and face value, while equity valuation treats dividends and expected resale value as shareholder cash flows.

Where interpretation enters the calculations

Finance answers are more than calculator outputs. A bond price must be classified as premium, par, or discount by comparing coupon rate with yield.

A dividend model must state whether growth is absent, constant, or staged. A payout decision must separate cash distribution from information signalling and investment opportunity. A portfolio calculation must explain why correlation changes risk while leaving weighted expected return unchanged.

These interpretations provide direction checks that can expose a wrong period count or an inconsistent rate before submission.

The assessment structure

The published Semester 2 structure contains an Early Feedback Quiz worth 5%, a Mid Semester Exam worth 20%, a Major Group Assignment worth 25%, and a Final Exam Closed Book Written Exam worth 50%. The weights total 100%.

The early quiz covers the first three lectures and the first two tutorials and runs online for 50 minutes. The mid-semester task covers Topics 1 to 5, lasts one hour, uses multiple-choice questions, and supplies a formula sheet.

The official outline describes the final as a two-hour closed-book written exam, while the Canvas page says it assesses all unit material using problem-solving and short-answer questions.

What the captured source can and cannot support

The course folder contains extensive lecture notes, teaching notes, tutorial questions, and solutions through the early topic sequence, with especially rich worked material for time value, rates, bond pricing, equity valuation, dividend policy, and risk.

The weekly schedule names later topics such as CAPM, cost of capital, capital budgeting, and market efficiency, but their full teaching files were not captured. This guide concentrates on the seven topic packs that can be grounded and recomputed directly.

It does not imply that these seven chapters exhaust the final examination.

How to study from this guide

Read the concept map, then close the model and reproduce the worked calculation with fresh numbers. Use a timeline whenever cash flows occur on more than one date. Carry at least four decimal places through intermediate work and round only the final answer.

For a bond, predict premium or discount before pricing. For a share, label the next dividend and terminal-value date. For a portfolio, confirm that weights sum to one and that correlation enters variance rather than expected return.

Worked example · free

Price a semiannual coupon bond and classify it

Key terms

Agency Problem

A conflict that arises when managers can pursue private objectives that reduce value for shareholders who supplied the risk capital.

Net Present Value

The present value of expected future cash flows less the investment required today, evaluated at a risk-appropriate discount rate.

Effective Annual Rate

The actual one-year growth rate after the effect of compounding within the year has been included.

Annuity

A finite stream of equal cash flows paid at regular intervals, valued one period before the first ordinary payment.

Perpetuity

A stream of regular cash flows that continues indefinitely, with value equal to the next payment divided by the periodic discount rate.

Yield to Maturity

The discount rate that equates a bond's promised coupon and face-value cash flows with its current market price.

Dividend Discount Model

An equity valuation method that treats expected shareholder dividends as the cash flows to be discounted.

Franking Credit

A credit attached to a franked dividend that recognises company tax already paid on the underlying profit.

Expected Return

The probability-weighted average return across possible outcomes or the weighted average return across assets in a portfolio.

Standard Deviation

The square root of return variance, expressed in the same units as return and used as a measure of volatility.

Correlation

A standardised measure from minus one to plus one describing how two asset returns move together.

Systematic Risk

Risk linked to broad market movements that remains after company-specific exposures have been diversified.

FINC2011 FAQ

Questions students ask in each FINC2011 chapter

Why classify finance decisions before analysing them?

Classification identifies the relevant comparison. Investments are judged by value created from future cash flows, financing by the claims and risks used to fund assets, and payout by whether cash should be distributed or retained. A transaction can contain more than one decision, so explain each purpose. Chapter 01 · Finance Decisions and Agency

Why is the timeline so important?

The timeline fixes the valuation date, payment dates, and interval count. It exposes whether a payment is at the beginning or end of a period and whether an annuity is delayed. Most exponent errors are timing errors that a labelled line would reveal immediately. Chapter 02 · Time Value of Money

Why is APR different from EAR?

APR is a quoting convention that annualises a periodic rate without adding the within-year interest-on-interest effect. EAR measures actual growth over a year after compounding. When the APR compounds more than annually, EAR is normally higher than the quoted APR. Chapter 03 · Rates, Loans and Uneven Cash Flows

Why do bond prices move opposite yields?

A bond's promised coupons and face value are fixed. When the market required return rises, those same cash flows are discounted more heavily and price falls. When required return falls, their present value rises. The inverse relation follows directly from discounting. Chapter 04 · Bond Valuation and Yield

Does the company receive cash from every share trade?

No. The company receives capital when it issues new shares in the primary market. Most later trades occur between investors in the secondary market. Those trades still matter because liquidity and price discovery influence investor confidence and future capital-raising terms. Chapter 05 · Equity Markets and Share Valuation

Why does price fall on the ex-dividend date?

A buyer on the ex-dividend date does not receive the declared cash payment, so the share carries less near-term value. Other things equal, price should fall by roughly the dividend. Market news and tax effects can make the observed movement differ from the clean benchmark. Chapter 06 · Dividend Policy and Imputation

Why are arithmetic and geometric returns different?

Arithmetic average takes a simple mean and is useful for a single-period expectation. Geometric average captures compounding across time. Volatility creates a gap because a loss needs a larger percentage gain to recover, so geometric average is normally lower for a fluctuating return series. Chapter 07 · Risk, Return and Diversification

How to study for the exam

Treat the course as a chain of reusable structures rather than a list of formulas. For each topic, make one page with the decision, the cash-flow picture, the formula, the rate convention, and a direction check. Rework tutorial-style questions with fresh amounts and different timing so recognition does not depend on remembered answers.

Before the mid-semester test, drill Topics 1 to 5 under a one-hour limit and practise moving between concept questions and calculations. For the final, preserve the official distinction: it is a two-hour closed-book written exam with problem-solving and short-answer work, so retrieval and explanation both matter. Build recall by reconstructing formulas from timelines, not by reading them repeatedly.

In every calculation, carry at least four decimal places until the final line. In every written explanation, name the decision or risk, apply it to the facts, and state the consequence. Use the current Canvas pages for any sitting-specific operational instructions.

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