VEE-Corporate Finance
The following guidelines for the Validation by Educational Experience (VEE) requirement for Corporate Finance will be used by the VEE Administration Committee to determine whether specific courses or educational experiences are appropriate to fulfill the VEE requirements.
The typical corporate finance sequence in a business school consists of an introductory semester followed by an advanced semester. The advanced semester will more likely be the one that aligns with the learning objectives.
The standard validation method will be completion of the second semester of a two-semester corporate finance sequence. Generally, only the second semester course grade will be evaluated unless this is a narrow course in which case both the first and second semester course grades will be evaluated. The exceptional case where the corporate finance material is covered in one course only will also be considered.
Most of the topics in each category listed below should be covered:
Finance
- Definitions of key finance terms: stock company; capital structure
- Key finance concepts: financing companies; characteristics and uses of financial instruments; sources of capital; cost of capital; dividend policy; personal and corporate taxation
- Factors to be considered by a company when deciding on its capital structure and dividend policy
- Impact of financial leverage and long/short term financing policies on capital structure
- Characteristics of the principal forms of financial instruments issued or used by companies, and the ways in which they may be issued
- How a company's cost of capital relates to the investment projects the company wishes to undertake
Investment
- Key finance concepts: option pricing theory and stock valuation
- Definitions of key finance terms: financial instruments - bond, stock, basic options (calls, puts); dividends; price to earnings ratio
- Structure of a stock company and the different methods by which it may be financed
- Calculate value of stocks
- Calculate value of options
- Measures of financial performance: balance sheet; income statement; statement of cash flows; financial ratios (e.g. leverage, liquidity, profitability, market value ratios); net present value: the payback, discounted payback models; internal rate of return and profitability index models
- Assessment of financial performance using various measures: balance sheet; income statement; statement of cash flows, financial ratios (e.g. leverage, liquidity, profitability, market value ratios); net present value; the payback, discounted payback models; internal rate of return and profitability index models
Specific questions may be sent to vee@soa.org.
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