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Professor André FARBER
Solvay Business School

Université Libre de Bruxelles

GEST-D-408 Advanced Finance
2007-2008

News
April 18, 2008:
Solution for Daucus Carotta has been posted
March 19,2008: for coming sessions, download slides from Hugues Pirotte’s web site: www.solvay.edu/cours/pirotte
January 31, 2008: I have started updating my website. Updated links are indicated with an **

**Course outline (pdf)
Formula sheet

Slides
1. **Introduction/ Asset Pricing Models.
2.* *MM - Debt and Taxes
3. **WACC
4. **APV - Leasing
5. **Risky debt: binomial
6. **Risky debt: Merton model
7. **Optimal capital structure: Leland model
        More on structural model + Leland exponential model
8. Convertible bonds, warrants
9. IPO, Seasoned Equity Offering
10.Dividend policy

Problem sets
Daucus Carotta (Asset pricing models) – Class solution NEW
Deutsche Stock Exchange (financing decisions with perfect capital markets) Solution (PP)
Belgacom IPO (debt and taxes) Solution (PP)
Eurotech (A) + Solution (PP)
Eurotech (B)  + Solution (PP)


Practice Advance Finance
Questions (Part 1)
Questions (Part 2)
Answers (Excel files)
1. Fetco – Valuation under uncertainty
2. YellowSub – Financing Decisions in Perfect Capital Markets
3. GoGo – Capital Structure with Corporate Taxes
4. BEC – Using the WACC formulas
5. Clodoco – Using the APV
6. BTC – WACC (Revised April 2007)
7. Yopex – Highly Levered Transaction
8. FLOP – Leasing
9. Gaelic Real Estate – Risky debt, binomial
10. Biotec – Agency Costs of Leverage
11. Redleaf – Tradeoff theory
12. BlueTree – Tradeoff theory (again)
13. CAPM – Tradeoff model and the CAPM
14. Zoubowsky – Convertible debt

Excel files
I help you prepare the exam, I have prepared Excel files with questions and answers
Capital structure - no taxes
Capital structure - corporate taxes
Adjusted present value calculation
Lease valuation
Miles Ezzel/Harris Pringle Excel file used for example in slides
Risky debt valuation models (corrected version)
Risky debt (binomial model)
Risky debt (Merton’s model)
Leland model illustration
Convertible bond
Bonds with warrants

Readings NEW
Reading 1: Efficient Market Hypothesis
Reading 2: MM Propositions 40 years later
Reading 3: Debt is good for you
Reading 4: Capital structure – survey
Reading 5: Capital Structure: Evidence
Reading 6: Modeling Default Risk (shows practical application of Merton model)
Reading 7: A Review of IPO activity
Reading 8: Dividend puzzle

Past exams
Here is a set of past exams (in French  questions d'examens) with solutions + exams from previous two years.
Examen Juin 2000 + Solution
Examen Juin 2001 + Solution
Exam June 2002 + Solution
Examen Juin 2003 + Solution
Examen Juin 2004 + Solution (revised 20-05-2005)
Exam June 2005 + Solution
Exam June 2006
Exam June 2007