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Introduction to Finance
Introduction to Finance
Goal
Equip students with the basic tools necessary for making efficient financial decisions while taking into account future cash flows and their risk.
MethodologyStudents will master the required theoretical tools and apply them to day-to-day decision of individuals (saving/retirement/mortgage…)
outline
• Logistics• Course schedule
Logistics
Class Material
On our website http://www.bauer.uh.edu/nlangberg/teaching_635.htm
Text book
I will teach and assign problems using the book Corporate Finance by Jonathan Berk and Peter DeMarzo, Perason
Alternative Reading
Further/alternative reading is Brealey, Myers and Allen, Principals of Corporate Finance, McGraw-Hill Irwin, 8th edition or higher
Buying the book?
I do recommend buying the book
• The course is built around the text book• Excellent reference book for those to plan to
work in the area of corporate finance• Taught in leading B schools around the world
Group Assignments
• I encourage work in groups• Groups are limited to four students
Grade
• Homework assignments: 30%• Data Case: 5%• Final exam: 65%
Office hours
• appointment by email• welcome to stop by my office• Send specific questions by email
Course Schedule
(tentative)
Course schedule
August 28IntroductionTime value of money• Future value, present value, discounting
stream of cash flows• Annuities, perpetuities, growing annuities and
growing perpetuities
Course schedule
September 4Time value of money continued
September 11Interest rates• APR, EAR, Amortizing loans• Nominal and Real interest rates• The Term Structure of Interest RatesPractice questions CH3,4 due
Course schedule
September 18Investment Decision Rules• NPV, Payback period,
IRR, EVA• Multiple investment
opportunities• Resource constraints,
Profitability IndexPractice Questions CH5 due
September 25Pricing Risk• Risk and return• Expected return, Volatility• Calculating realized returns• Excess returns• Systematic and
Idiosyncratic risk• Diversification• CAPMPractice questions CH6 due
Course schedule
October 2Review Homework assignments and solutions with Ming the teaching assistant
October 9Stock ValuationBond ValuationPractice questions CH10 and Data Case chapter 10 due
October 12Tentative Make up class 9:00-12:00
October 16Final 6:00-9:00
Questions before we start?
