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Description:
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Both Financial Accounting and Finance are required Pre-Requisites for this class. The faculty will not waive these pre-reqs.
This course covers the theory and methods of corporation finance. We will apply those methods to specific business problems such as valuation, capital structure, acquisitions, payout policy, corporate governance, and the process of issuing securities. We will read current academic research on these topics, and join a number of the major debates over both public and corporate policy in this area.
Objectives:
1. Corporate Investments (Capital Budgeting)
Understand why shareholders agree on the Net Present Value criterion for evaluating risky investments and the conditions under which they may disagree. To achieve this objective, we will investigate the arbitrage or replication approach to valuation and its consequences for capital budgeting and capital structure decisions.
2. Corporate Financing (Funding)
Understand how and why funding with equity or debt can create, destroy and modify value. To meet this goal, we will work to understand the importance of market frictions such as taxes and transaction costs.
3. Corporate Finance Strategy
Integrate the financing and investment decisions. To attain this goal, we will study how market frictions which affect funding decisions influence the investment decision.
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