Introduction to finance
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Introduction to Finance. Welcome. Nisan Langberg [email protected] Office 210E Teaching Assistant PJ Pritzker [email protected] Goal. Equip students with the basic tools necessary for making efficient financial decisions while taking into account future cash flows and their risk.

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Presentation Transcript

Welcome
Welcome

Nisan Langberg

[email protected]

Office 210E

Teaching Assistant

PJ Pritzker

[email protected]


Goal

Equip students with the basic tools necessary for making efficient financial decisions while taking into account future cash flows and their risk.

Methodology

Students will master the required theoretical tools and apply them to day-to-day decision of individuals (saving/retirement/mortgage…)


Outline
outline

  • Logistics

  • Course schedule


L ogistics
Logistics


Class material
Class Material

On our website

http://www.bauer.uh.edu/nlangberg/teaching_635.htm


Text book
Text book

I will teach and assign problems using the book Corporate Finance by Jonathan Berk and Peter DeMarzo, Perason


Alternative reading
Alternative Reading

Further/alternative reading is Brealey, Myers and Allen, Principals of Corporate Finance, McGraw-Hill Irwin, 8th edition or higher


Buying the book
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
Group Assignments

  • I encourage work in groups

  • Groups are limited to four students


Grade
Grade

  • Homework assignments: 30%

  • Final exam: 70%


Office hours
Office hours

  • appointment by email

  • welcome to stop by my office

  • Send specific questions by email


Course schedule tentative
Course Schedule(tentative)


Course schedule wednesday and thursday classes
Course schedule Wednesday and Thursday classes

August 27/28

Introduction

Time value of money (chapters 3.1-3.3 and 4)

  • Future value

  • present value

  • discounting stream of cash flows

September 3/4

Time value of money continued

  • Annuities, perpetuities, growing annuities and growing perpetuities

  • Saving for retirement

  • Mortgage


Course schedule
Course schedule

September 10/11

Review of Time value of money with TA

  • Review of basic discounting principals

  • Solution of homework questions in class

  • Additional advanced practice questions

    Practice questions CH3,4 due

September 17/18

Interest rates (chapter 5)

  • APR, EAR, Amortizing loans

  • Nominal and Real interest rates

  • The Term Structure of Interest Rates

    Basics of Bond Valuation (chapter 6)

  • Type of bonds

  • Structure of bonds

  • valuation


Course schedule1
Course schedule

September 24/25

Investment Decision Rules (chapter 7)

  • NPV, Payback period, IRR, EVA

  • Multiple investment opportunities

  • Resource constraints, Profitability Index

    Practice Questions CH5/6 due

October 1/2

Stock Valuation (chapter 9)

  • Investing in stocks

  • The Constant Dividend Growth model

  • The dividend and growth tradeoff

  • Changing growth rates

  • Application: ebay

    Practice questions CH7 due


Course schedule2
Course schedule

October 8/9

Pricing Risk (chapter 10)

  • Risk and return

  • Expected return, Volatility

  • Calculating realized returns

  • Excess returns

  • Systematic and Idiosyncratic risk

  • Diversification

  • CAPM

    Practice questions CH9 due

October 11

Make up class (Saturday) 9:00-12:00

October 15/16

Final 6:00-9:00



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