| Part 1 - Introduction |
| 1 |
Introduction
What is Finance? What Types of Questions Will We Answer? |
Chapter 1
Dial, J. and K. Murphy. Incentives, Downsizing, and Value Creation at General Dynamics. Journal of Financial Economics 37, 1995, pp. 261–314. |
| 2 |
Principles Of Valuation
Opportunity Cost Of Capital; Present Value; Discount Rates; Comparables |
Chapter 2, 3
Study Questions:
Chapter 2: 6, 7, 10
Chapter 3: 1, 3, 5, 10, 12, 21, 27, 30 |
| Part 2 - Project and Firm Valuation |
| 3 |
Evaluating Projects
Net Present Value; Measuring Cashflows, Using Accounting Data |
Chapter 6, 12.1 - 12.3
Myers, S. Finance Theory and Finance Practice. Interfaces 14, 1984, pp. 126-137. Reprinted in MidlandCorporate Finance Journal 5, Spring 1987.
Study Questions:
Chapter 3: 4, 7, 6, 13
Chapter 6: 6, 8, 9, 11, 18
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| 4 |
Case |
Reinhardt, Forest. Acid Rain: The Southern Co. (A). Boston, MA: Harvard Business School, 1993. Case No. 9-792-060. |
| 5 |
Evaluating Projects (2)
Real Options, Internal Rate Of Return |
Chapter 5, 10, 11
Study Questions:
Chapter 5: 3 - 8
Chapter 10: 3 - 5, 10, 11 |
| 6 |
Firm Valuation
Growth and Free Cashflows |
Chapter 4
Study Questions:
Chapter 4: 5 - 8, 11 |
| 7 |
Firm Valuation (2)
Valuation Models, Accounting vs. Economic Returns |
Chapter 12.4 - 12.6
Kim, M. and J. Ritter. Valuing IPOs. Journal of Financial Economics 53, 1999, pp.409-437.
Study Questions:
Chapter 4: 1, 10, 12, 17, 19 |
| 8 |
Case |
Piper, Thomas R. Cooper Industries, Inc. Boston, MA: Harvard Business School, 1993. Case No. 9-274-116. |
| Part 3 - Risk and Return |
| 9 |
Introduction to Risk and Return
Historical Evidence; Measuring the Risk of a Portfolio; Statistics Review |
Chapter 7 (pp. 153-165)
Study Questions:
Chapter 7: 1, 3, 4, 5 |
| 10 |
Portfolio Theory
Risk in a Portfolio Context, Diversification; Optimal Portfolios |
Chapter 7 (165-end), 8.1
Study Questions:
Chapter 7: 6 - 11, 15
Chapter 8: 2 - 4 |
| 11 |
CAPM
Quantifying the Trade-off between Risk and Return; Measuring the Risk of a Stock |
Chapter 8.2 - 8.5
Study Questions:
Chapter 8: 1, 5, 7, 8, 11 - 13 |
| 12 |
Discount Rates in Practice
Estimating Betas, Market Risk Premium, Multifactor Models, WACC |
Chapter 9
Graham, J. and C. Harvey. The Theory and Practice of Corporate Finance: Evidence From the Field. Durham, NC: Duke University Working Paper, 2000, pp. 1-10.
Study Questions:
Chapter 9: 1, 3, 5 - 9, 14
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| 13 |
Case |
Mitchell, Mark. Cost of Capital at Ameritrade. Boston, MA: Harvard Business School, 2001. Case No. 9-201-046. |
| Part 4 - Financing Policy |
| 14 |
Raising Capital
Sources of Funds; Trade-offs; Empirical Evidence; Stock Market Reaction |
Chapter 14, 15
Smith, C. Raising Capital: Theory and Evidence. Midland Corporate Finance Journal 4, pp. 6-22, 1986. |
| 15 |
Capital Structure (1)
The Choice between Debt and Equity; MM Theorem; Leverage and Risk; Fallacies |
Chapter 17
Graham, J. and C. Harvey. The Theory and Practice of Corporate Finance: Evidence From the Field. Durham, NC: Duke University Working Paper, 2000, pp. 10-22.
Study Questions:
Chapter 17: 2 - 6, 10 - 13 |
| 16 |
Capital Structure (2)
Taxes and the After-Tax WACC, Financial Distress, Debt Overhang |
Chapter 18, 19.1 - 19.4
Myers, S. The Search for Optimal Capital Structure. Midland Corporate Finance Journal 1, 1983, pp. 6-16. Reprinted in D. Chew, Ed. The New Corporate Finance: Where Theory Meets Practice.McGraw Hill, 1993, pp. 142-150.
Bank of America Roundtable on the Link between Capital Structure and Shareholder Value. Journal of Applied Corporate Finance 10 (2), 1997. Reprinted in D. Chew, Ed. The New Corporate Finance: Where Theory Meets Practice, 3rd edition. McGraw Hill, 2001, pp. 247-274.
Study Questions:
Chapter 18: 1 - 7, 10 - 12
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| 17 |
Two Cases |
Mitchell, Mark L., and Janet Mitchell. UST, Inc. South-Western College Publishing, 1996. ISBN No. 0-538-85800-1.
Baldwin, Carliss Y., Scott P. Mason, and Jennifer H. Hughes. Massey-Ferguson Ltd. - 1980. Boston, MA: Harvard Business School, 1990. Case No. 9-282-043.
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| 18 |
Market Efficiency
Empirical Evidence; Implications for Corporate Managers |
Chapter 13
Ball, R. The Theory of Stock Market Efficiency: Accomplishments and Limitations. Journal of Applied Corporate Finance 8, 1995, pp. 4-17.
Study Questions:
Chapter 13: 1, 2, 3, 11, 13 |
| Part 5 - Miscellaneous Topics |
| 19 |
Options
Risk Management, Option Strategies, Black-Scholes Model, Implied Volatility
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Chapter 20, 21
Case: Tufano, Peter, and Michael Lewittes. Sally Jameson: Valuing Stock Options in a Compensation Package. Boston, MA: Harvard Business School, 1993. Case No. 9-293-053.
Study Questions:
Chapter 20: 3, 4, 8 - 10, 16
Chapter 21: 10, 14, 15
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| 20 |
Final Exam |
Exam |
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