UNIVERSITY OF LONDON 
FN2191: Principles of corporate finance 
Final Examination Guide and Notes 2026 
 
- Part 01: About This Guide 
- Part 02: Sample Final Examination Paper 
- Part 03: Suggested Solutions to Final Exam Paper 
- Part 04: Final Examination - Hints and Tips 
 
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University of London - Principles of Corporate Finance (FN2191)

£35.00

ACADEMIC YEAR 2025 - 2026

University	University of London
Module Code	FN2191
Module Level	5
Credit Value	30
Module Name	Principles of corporate finance
Notes Title	Final Examination Guide and Notes
Format	PDF
Page Length	35

This complete guide for FN2191: Principles of corporate finance at the University of London includes essential information on the final exam format, what to focus on, and the concepts most likely to be tested. Inside you’ll find exam-style questions with step-by-step solutions, straightforward explanations, and final-exam hints and tips, plus practical guidance on format, key marking points, timing, and model solutions to check your work.

This course is aimed at students who are interested in understanding the principles of corporate finance. It provides a theoretical framework used to address issues in project appraisal and financing, payout policy, capital structure, mergers and acquisitions, equity offerings, and risk management. It provides students with the tools required for further studies in financial intermediation and investments.

Syllabus:

Project evaluation: The NPV rule and IRR rules of investment appraisal; comparison of NPV and IRR; ‘wrong’ investment appraisal rules: payback and accounting rate of return.

Real options: Understand what real options are and why they are important in project valuation; understand and calculate the source of option value; three types of real options: options to abandon/expand/wait.

Dividend theory: The Modigliani–Miller and dividend irrelevancy; Lintner’s fact about dividend policy; dividends, taxes, and clienteles; asymmetric information and signalling through dividend policy.

Capital structure: the Modigliani–Miller theorem: Capital structure irrelevancy; taxation, bankruptcy costs and capital structure; weighted average cost of capital; Modigliani-Miller 2nd proposition; the Miller equilibrium; asymmetric information: 1) the under-investment problem, asymmetric information; 2) the risk-shifting problem, asymmetric information; 3) free cash-flow arguments; 4) the pecking order theory; 5) debt overhang.

Corporate governance: Separation of ownership and control; management incentives; management shareholdings and firm value; corporate governance.

Mergers and acquisitions: Motivations for merger activity; calculating the gains and losses from merger/takeover; the free-rider problem and takeover activity.

Equity offerings: Understand venture capital and equity issuance in the public market; perform valuation with multiple financing rounds; initial public offerings and underpricing; winners’ curse problem.

Risk management: Understand why and how companies manage risk; cost of hedging; covered and uncovered interest rate parity.

MODULE CODE	MODULE NAME
AC1025	Principles of Accounting
AC2091	Financial Reporting
AC2097	Management Accounting
AC3059	Financial Management
EC1002	Introduction to Economics
EC2020	Elements of Econometrics
EC2065	Macroeconomics
EC2066	Microeconomics
FN1024	Principles of Banking and Finance
FN2029	Financial Intermediation
FN2190	Asset Pricing and Financial Markets
FN2191	Principles of Corporate Finance
FN2203	Principles of Asset Pricing
FN2208	Financial Data Analysis
FN3023	Investment Management
FN3092	Corporate Finance
FN3142	Quantitative Finance
FN3204	Investments and Portfolio Management
FN3206	Derivatives and Risk Management
MN1178	Business and Management in a Global Context
MN2028	Managerial Economics
MN3141	Marketing Management
ST104A	Statistics 1
ST104B	Statistics 2
ST2187	Business Analytics, Applied Modelling & Prediction

University of London - Principles of Corporate Finance (FN2191)

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