Course Page

Valuation and Financial Information

Course Number:

45802


Program

MBA


Concentrations

Accounting


Course Description

This course combines accounting and finance theory to answer the following two questions:

What is a stock worth?

What is the expected return from a stock given its spot market price?

Answering these questions is important in today’s world which is increasingly dominated by high frequency volume traders who generate the majority of the trading volume.  These traders hold stocks for short periods of time, some estimates being 11-seconds.  These questions also have profound implications for the economy at large. For example, Allan Greenspan former Federal Reserve Bank chairman, at a hearing on Capitol Hill on Thursday October 23, 2008 conceded he had put “too much faith in the self-correcting power of free markets.”

The course adopts a hands-on fundamental valuation approach to these questions and develops three types of models:  Free Cash Flow to Equity Model, Accounting Residual Income Model and if working with distressed stocks, Merton’s option based model.  In this course you will work with advanced software designed to let you combine visual analytics, interactive financial reports and valuation theory, to assess the intrinsic value of a stock and its expected return.  Emphasis is on working in small teams and each week you will apply the conceptual material introduced in the prior week’s classes to your team’s stocks. You can choose two stocks from the set listed on NYSE, NASDAQ and AMEX for your class project.  (3/12 - JO)


Format

Lecture: 100min/wk and Recitation: 50min/wk


Pre-requisites

45700 OR 45701