This course provides an introduction to the principles of modern finance. Specifically, we will be discussing how a corporate manager can evaluate and finance prospective investments and projects. Also, we will talk about how to price various financial instruments, including stocks, bonds, derivatives, etc. The topics can be broadly divided into the following major areas. The first is called valuation. This part of the course involves learning the concepts and techniques necessary to evaluate the cash flow of projects. A sample of topics covered within this part of the course include time value of money, NPV, internal rate of return, stock prices, bond prices, etc. All of these concepts are used to evaluate projected cash flows of an investment. The second part of the course focuses on the relationship between risk and return. Sample topics include market efficiency, concepts of risk, diversification, portfolio theory, Capital Asset Pricing Model, and behavioral finance. We will also discuss how managers finance the projects after making their investment decisions; this is the issue of capital structure.
|This is a introductory level survey course on finance. After this course, students are expected to have the basic understanding and analytical skills of modern finance, including time value of money, risk and return, capital structure, capital budgeting, etc.