Carola Frydman is a Professor of Finance at the Kellogg School of Management. Professor Frydman's research focuses on American business history. Recent research projects examine the evolution of financial markets during the early twentieth century, with special emphasis on the role of financial intermediaries for firm growth, and on financial crises. She has also studied the long-run trends in executive compensation, the market for managers, and corporate governance. Her work has been published at journals such as the American Economic Review, the Journal of Political Economy, the Journal of Financial Economics, and the Journal of Economic History, and featured in The Wall Street Journal, the New York Times, and The Economist. She is on the Editorial Board of Explorations in Economic History, the Journal of Economic History, and of the Review Studies in Corporate Finance. Prior to joining Kellogg, Professor Frydman was an Assistant Professor of Finance at the MIT Sloan School of Management (2006-2011) and an Assistant Professor of Economics at Boston University (2011-2016). She holds a Ph.D. in Economics from Harvard University, and B.A. and M.A. degrees in Economics from Universidad de San Andres, Argentina, and is a Research Associate at the National Bureau of Economic Research.
Prerequisite: Business Analytics I (DECS-430-5)
Corequisite/Prerequisite: Accounting for Decision Making (ACCT-430) and Business Analytics II (DECS 431-0)
Finance II: Corporate Finance covers the financial knowledge you need to run a firm, whether the firm is a multi-billion international conglomerate or a three-person start up. You will learn how to answer the three fundamental question of corporate finance: (1) Capital structure or the funding decision: which source(s) of capital should you use to fund the firm's project? (2) Capital budgeting or the investment decision: which projects should you invest in? (3) Dividend decision: how should you deploy the capital that the project returns?
We will cover the three fundamental methods for valuing projects and firms: discounted cash flow (or net present value), real options, and multiples analysis. The class begins with a theoretical framework. The world of finance is very complex. Without a logical structure that you can use to frame and answer questions, you will rapidly become lost and will be unable to defend your position. The theoretical framework is valuable, however, only if you can use it to examine real world decisions. Thus the majority of class time will be devoted to applying the logical framework.
This course is important for anyone who plans to run a firm or a division, who hopes to be involved in the investment or funding decisions of the firm, who plans to work for a service provider who will assist the firm in analyzing these decisions (e.g., banking and consulting), or who plans to invest in firms or advise clients who will invest in firms. Even if you initially specialize in a different functional area, you want to understand how the finance function works. The most brilliant idea isn't useful if you cannot get it funded.
Recommended Prerequisites: ACCT-430 and MECN-430