FIN 401: Corporate Finance and Risk Management


  • A fundamental introduction to the modern theory of business financing
  • An introduction to business valuation and capital costs calculus
  • An introduction to the most important derivatives (forwards, options)
  • An introduction to corporate risk management

Learning outcomes
Participants of this partial module learn to assess and analyze the decision making problems of a finance department. They will be able to understand the effects of the fiscal system on financial decisions and to correctly calculate the capital costs for a corporation. Students will be made familiar with the essential instruments and decision-making processes inherent to the financing of listed corporations (stocks, bonds, loans, convertible bonds and other structured products). They also learn to understand the key risks a modern corporation faces and how to use derivatives to manage risks. Students will also be familiar with basic pricing techniques for derivative instruments.

Necessary prerequisites
Semester 3 or higher

Recommended prerequisites
FIN 301 Investments and Asset Pricing

Forms of teaching and learningContact hoursIndependent study time
Lecture2 SWS7 SWS
Exercise class2 SWS6 SWS
ECTS credits6
Graded yes
Form of assessmentWritten exam (90 min)
Restricted admissionno
Further information
Performing lecturer
Prof. Dr. Stefan Ruenzi
Prof. Ernst Maug, Ph.D.
Prof. Dr. Stefan Ruenzi / Prof. Ernst Maug Ph.D.
Frequency of offeringFall semester
Duration of module 1 semester
Range of applicationB.Sc. BWL
Preliminary course workOnline Quizzes
Program-specific Competency GoalsCG 1
LiteratureThe course is based on the textbook „Principles of Corporate Finance“ by Richard A. Brealey, Stewart C. Myers, and Franklin Allen, 13th edition, published by McGraw-Hill 2019. Students may also rely on earlier editions.
There are no other articles or further readings for this course. The book also contains practice questions and quizzes for self-study and a link to a website with further materials. Students can also use the previous editions (11th/2013 or 10th/2011) of this book, as there are only minor changes.
All lecture slides and exercise materials can be downloaded on Ilias. You will be able to access the material after registration via the student portal.
Course outline
  • Introduction and overview of corporate financing
  • How corporations issue securities
  • Payout policy
  • Does debt policy matter?
  • How much should a firm borrow?
  • Financing and valuation
  • Understanding options
  • Midterm exam
  • Option Valuation I
  • Option Valuation II
  • Real options
  • Corporate bonds and credit risk
  • Corporate risk management
  • Review session