Financing of Property Investments 5254

Prerequisites

Knowledge equivalent to 5010 Business Financial Analysis and Accounts, 5500 Mathematics, 5550 Statistics and 5002 Investment and Finance.

Course Objectives

The course mainly builds further on the topics covered in the course 5002, Investment and Finance. It is rather more advanced, theoretically, in that new topics such as derivative instruments for managing risks are included. In addition to the emphasis on theory, the course considers how to apply investment and finance theory practically to those applications that are particular to the property market. As a result, the course includes a large number of practical and applied problem approaches related to the property market.

Course Description

Specialised elements which will be covered:

• Short repetition of the main topics from 5002 Investment and Finance, that is, cash-flow, current value, internal interest, basic interest calculation, the capital value model and systematic/unsystematic risk
• Value increases in the property market, yield level and the connection with macroeconomic conditions such as term structure of interest rates and the level of inflation.
• Financing options, debt-equity ratio and risk
• The measurement of interest risk in long-term loan agreements.
• Derivative markets: forward-/future markets, options, swap and hedging strategies.
• The measurement and management of cash flow risk using derivative contacts.
• Optimal financing of property projects.

Learning Methods

3-4 hours of lectures weekly during the autumn semester.

Assessment Methods

Final individual written examination, 4-5 hours.

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