Suggested Curriculum

Basic Finance
Finance I. [Kellogg School]
This course studies the effects of time and uncertainty on valuation and financial decision-making. The course includes both tools, like discounting and risk adjustment, and applications to capital budgeting and security valuation. Topics are:

1. Discounting techniques used to allow for the effect of time on value.

2. Asset pricing models, like the CAPM (Capital Asset Pricing Model), then introduce risk and its effect on value.

3. These techniques are applied to equity and bond valuation, using discounting and risk adjustment to value cash flows from financial securities.

4. Capital budgeting uses discounting and risk adjustments to value firm's projects and decide which ones to implement.

5. Efficient markets then provide the discipline of arbitrage on financial statements.

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Finance II. [Kellogg School]
The primary objective of this course is to study the financial decisions of firms. The course examines the firm's capital budgeting decision (which investments to make), its dividend decision, and its capital structure decision (how to raise capital). Topics are:

1. Capital budgeting, which focuses on firm's investment decisions, including when investment projects have option-like features.

2. Dividend policy, which determines the way in which firms pay out cash flows to investors, in both perfect markets and with market imperfections (such as taxes and asymmetric information).

3. A firm's capital structure, which is its sources of financing.

4. Financing decisions in an idealized frictionless world (perfect markets).

5. Effect of market imperfects such as taxes, asymmetric information and costs of financial distress on financing decisions and how these decisions can effect firm value.

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