Corporate Finance

Catalog description

Building on concepts learned in Fundamentals of Finance, this intermediate level course continues with the discussion of valuing cash flow streams and introduces the notion of risk in individual assets and portfolios. Following which, the course will move on to an in-depth analysis of firms' financing choices and capital structure, and the estimation of corporate cash flows using various financial modeling techniques. The course covers equity and firm valuation using different financial models, including sensitivity analysis using Monte Carlo simulations. The course also covers dividend policy, options, payoffs from combinations of options, and develops the Black-Scholes option pricing formula for pricing options. Emphasis is placed on applications of option pricing in corporate finance including viewing loan guarantees and FDIC insurance as options and in valuing warrants and convertible bonds. While the course is grounded in solid theory, it will provide a thoroughly applied perspective on the topics covered.