Managerial Finance

This course covers the foundations of financial decision making by relying on a set of simple but powerful ideas. The core idea is theprinciple of the absence of arbitrage opportunities, or Law of One Price. We rely on thisprinciple and the concept of net present value as the basis of the lectures’ unifying framework. Given the introductory and applied nature of the material, the teaching style combines classical lectures with discussions based on case studies. The instructor expects the participants to read the cases and think about the central problem analyzed in the case prior coming to class. We will discuss the course material together with the questions pertaining to the cases.

• Financial Markets, Financial Institutions, and their Functions
• The Corporation and its Governance
• Mechanics of Discounting / Investment Decision Rules / Capital Budgeting
• Capital Markets and the Pricing of Risk
• Optimal Portfolio Choice and the Capital Asset Pricing Model
• Financial Options (Overview)
• Investor Behavior and Capital Market Efficiency (Overview)

The course has two main objectives: (1) to give every participant a base level of finance knowledge that an MBA from a top business school should possess, and (2) to give every participant the ability and confidence to tackle common financial problems in practice. By the end of this module, the successful participants should internalize the common financial concepts such as “the time value of money”, “investment decision rules”, “value creation”, “the risk and return trade-off”, “CAPM”, “portfolio optimization”, “put and call options”, “risk aversion”, and “behavioral biases in decision making”.

Textbook: Brealey, Richard A., Stewart C. Myers, and Franklin Allen: Principles of Corporate Finance - Global Edition, McGraw Hill. [latest edition]. (hereafter BMA) Cases: Case #1 Warren Buffett – 2005 Case #2 Investment Analysis and Lockheed Tri Star (HBS 9-291-031) Case #3: Beta Management Co. (HBS 292122) Case #4: Keller Fund's Option Investment StrategiesCourse Pack: The required course packet contains all the material for the class, except the for the textbook, which will be available separately.

Depending on Corona regulations:

class room teaching, group work, case studies, and guest lectures by industry experts

Written Examination, Online Quizzes, Case Study

Equal to the ECTS-credits allocated for this module:

50% Written Final Exam, 15% Online Quizzes, 35% Case Study

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