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                                                           Economics/Finance Department

Required text: Corporate Finance, Fourth Edition, By Ross, Westerfield, and Jaffe, Irwin, Chicago,
Illinois, 1996.

The Wall Street Journal (subscription is suggested)

Description of the course: This course is an MBA core course which deals with principles of policy
formulation in the modern corporation, the institutions, instruments, valuation, return and risk, capital
budgeting, capital structure and dividend policy. Also, long term financing and computerized approaches to
financial problems will be emphasized.

objectives: The major objectives of the course are:

1. To familiarize students with issues of Financial Management, Value and Capital Budgeting, Risk, Capital
Structure and Dividend Policy and long term financing.

2. To master topics on Policy formulation in the modern corporation.

3. To learn empirical research techniques by using computers (Excel, TSP ,EViews, and A-Pack).

Topics Covered: Topics Classroom Hours
Overview:

1. Introduction to Corporate Finance (3)
2. Accounting statements and Cash Flow

Value and Capital Budgeting:

3. Financial Markets and Net Present Value (9)
4. Net Present Value
5. How to Value Bonds and Stocks
6. Some Alternative Investment Rules
7. Net Present Value and Capital Budgeting
8. Strategy and Analysis in Using Net Present Value

Risk
9. Capital Market Theory (6)
10.Return and Risk (the CAPM)
11.An alternative View of Risk and Return (the APT)
12.Risk, Return, and Capital Budgeting

Capital Structure and Dividend Policy
13.Corporate Financing Decisions and Efficient Capital Markets
14.Long Term Financing: An introduction
15.& 16. Capital Structure
17. Valuation an Capital Budgeting for the Levered firm
18. Dividend Policy.

Long term Financing
19. Issuing Equity securities to the Public
20. Long-term debt
21. Options and Corporate Finance
22. Warrants and Convertibles
23. Leasing
24. Derivatives and Hedging Risk
 
 

Class Meeting: The Class meets for 11 sessions of 3 hours and 10 minutes duration, plus a midterm and
a final examination.
 
 

Teaching Methods and Assigned Readings:

This course is designed to give the MBA students a good knowledge on Financial Management. A small
reading assignment will be put in the reserve library too. There will be two exams (40% each) and your
assignments together with a small project of estimating the expected rate of return of a stock with respect to
two indexes by using CAPM, computers (TSP program) or EViews, and actual data, will count for 20% of
the course. Midterm exam will be on January 16, 1997 and the Final exam on January 30, 1997.

The course will also give the students the opportunity to work with computers and do some empirical
research with different software packages. A few homework assignments will be given to the students
during the term at the end of every chapter. We plan to cover two chapters per lecture. Class discussions
will be devoted to lecture and discussion.

The students will be exposed to a wide range of issues, concepts, mathematical statistical and econometric
techniques, statistical and computer programs, and other information sources related to Financial
Management and different ethical, legal, regulatory, political, social and environmental issues for
corporations. Attendance and class participation is necessary.

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