| 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 | | 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 | | 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 | | 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. | | 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 | 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 | | 20 | Final Exam | Exam |
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