• Valuation of fixed income securities and common stocks
• Risk analysis, the Arbitrage Pricing Theory (APT), and the Efficient Market Hypothesis
• Introduction to corporate finance and capital budgeting
• Valuation of derivative securities
• Portfolio theory and the Capital Asset Pricing Model (CAPM)
• Corporate financial decisions
  • Real options, capital structure, payout policy, corporate bonds; and
  • Interaction between investment and financing decisions

Introduction to Finance

• Financial decisions of households and corporations
• Approaches to valuing financial and real assets
• The role and the overview of financial markets
• Financial Frictions
• Unifying principles of finance

Market Prices and Present Value

• State-space model for time and risk
• Security prices, state prices and arbitrage pricing
• Present Value (PV) and future value
• Discount rates, time value and risk premium: a historic perspective
• Compound interest
• Annuity and perpetuity formulas

Fixed Income Securities

• Fixed-income markets
• Term structure of interest rates
• Properties of bond prices and market conventions
• Inflation and real rates

Common Stocks

• Discounted Cash Flow (DCF) model
• Gordon model, multi-stage growth model
• EPS, P/E, PVGO

Risk

• Decision under uncertainty and expected utility theory
• Risk aversion
• Diversification and portfolio analytics
• Systematic and idiosyncratic risks

Factor models and Arbitrage Pricing Theory (APT)

• Factor models for risk
• APT
• Applications of APT

Market Efficiency

• Efficient Market Hypothesis (EMH)
• Implications of EMH
• Empirical evidence on EMH

Introduction to Corporate Finance

• Corporate financial decisions
• Opportunity cost of capital and NPV
• Financial objective of corporate managers

Capital Budgeting

• NPV rules
• Cash flow calculations
• Alternatives to NPV
• Project interactions
• Capital budgeting and discount rates