Enrichetta Ravina is a Visiting Associate Professor of Finance at the Kellogg School of Management. Professor Ravina's research focuses on Household Finance, Behavioral Finance, and Corporate Finance. Some of her recent research projects examine the investment and trading behavior of individuals in 401(k) plans, brokerage accounts, and other type of financial accounts, with special emphasis on the role of behavioral biases, imperfect information, financial anxiety, and inertia in affecting such decisions. She has also studied the portfolio allocations of high net-worth US households, and conducted several studies in Fin-Tech about the measurement of investors' risk attitudes and their evolution over time, and the effect of beauty, race and other personal characteristics in credit markets. Her work has been published at journals such as the Review of Financial Studies and the Journal of Financial Economics, and featured in The Wall Street Journal, the Financial Times, and The Atlantic. Prior to joining Kellogg, Professor Ravina was an Assistant Professor of Finance at NYU Stern (2005-2008), and an Assistant Professor of Finance and Economics at Columbia Business School (2008-2017). She holds a Ph.D. and an M.A. in Economics from Northwestern University, and a B.A. degree in Economics from the University of Torino, Italy.
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