Firms create value by making good investment decisions. Finance is a set of tools that help firms identify good investments and decide how to pay for them. Firms pay for investments by getting money from households. Therefore, finance also describes the investment decisions of households and how the economy's resources get allocated across different firms and across time. This course is the introductory finance course in the undergraduate business program. The main topics covered in the course are Financial Markets, Valuation by Arbitrage, Net Present Value, The Objective of the Firm, Discounted Cash Flow, Portfolio Theory and the Cost of Capital, The Efficient Markets Hypothesis, The Capital Structure of the Firm, and Business Valuation. Time permitting, the course will also provide an introduction to option markets and derivative securities. Upon completing the course a student will be able to consider a large and complex corporate decision, make some assumptions, structure the firms' cash flows in a spreadsheet, calculate the value of the decision and make a recommendation. Prerequisites: 73-100 and 70-207 (or its equivalents -- 36-201, 225, or 217).
Lecture: 100min/wk and Recitation: 50min/wk