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:
techniques used to allow for the effect of time on value.
pricing models, like the CAPM (Capital Asset Pricing Model),
then introduce risk and its effect on value.
techniques are applied to equity and bond valuation, using
discounting and risk adjustment to value cash flows from financial
budgeting uses discounting and risk adjustments to value firm's
projects and decide which ones to implement.
markets then provide the discipline of arbitrage on financial
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:
budgeting, which focuses on firm's investment decisions, including
when investment projects have option-like features.
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.
decisions in an idealized frictionless world (perfect markets).
of market imperfects such as taxes, asymmetric information
and costs of financial distress on financing decisions and
how these decisions can effect firm value.