Finance 488

Finance 488 PowerPoint PPT Presentation

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First Class. WelcomeSyllabus Class DescriptionWho is Jim MaharHand-in Class ?introductions" and ?attendance"Hand-out: Name cards. First Class (Continued) . Discussion of teams (selection due Tuesday). Personal Bio-page. IncludeNamephone (optional)E-mail address (required)Web page (optional

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Finance 488

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1. Finance 488 Jim Mahar James Madison University Fall 1998

2. First Class Welcome Syllabus Class Description Who is Jim Mahar Hand-in Class “introductions” and “attendance” Hand-out: Name cards

3. First Class (Continued) Discussion of teams (selection due Tuesday)

4. Personal Bio-page Include Name phone (optional) E-mail address (required) Web page (optional) Past Finance classes and related work experience Home town: Likes: Dislikes: ANYTHING else: Whether you prefer PowerPoint or blackboard notes.

5. Personal Bio-page Include Name:Jim Mahar phone (optional) 568-3075 E-mail address (required) maharjw Web page Past Finance classes and related work experience Home town:Olean, New York Likes: Sports, Running, Business,Hiking, Grocery Stores, Finance, trees, fruits and vegetables Dislikes:liars, lazy people, busy work, spending money, ANYTHING else: Mets, Bills,

6. Review of Finance Very brief overview. (Probably only 3 class periods) NPV Models Stakeholders vs. Shareholder Cash flow vs. accounting Income

7. Building blocks (Smith and Jensen 1984) Efficient Market Theory Portfolio Theory Capital Asset Pricing Theory Options Pricing Theory Agency Theory

8. Efficient Market Hypothesis Markets are tough to beat On average correctly priced What drives efficiency?

9. Portfolio Theory Diversify Lowers risk Market does not reward diversifiable risk

10. Capital Asset Pricing Theory CAPM and Alternatives What do we know about CAPM? What is a model?

11. Option Pricing Theory B-S 1973 Binomial Model Explosion in Derivatives Useful outside of Derivatives

12. Agency Theory What is a firm? Stakeholders Shareholders And in this corner Management vs. Shareholders Adam Smith 1776

13. Net Present Value MOST important topic Cost-benefit analysis Explains everything The decision rule of all decision rules!

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