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Introduction to Finance

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  1. Introduction to Finance

  2. Welcome Nisan Langberg nlangberg@uh.edu Office 210E Teaching Assistant Ming Chen mingchen2011@gmail.com

  3. 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…)

  4. outline • Logistics • Course schedule

  5. Logistics

  6. Class Material On our website http://www.bauer.uh.edu/nlangberg/teaching_635.htm

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

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

  9. 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

  10. Group Assignments • I encourage work in groups • Groups are limited to four students

  11. Grade • Homework assignments: 30% • Data Case: 5% • Final exam: 65%

  12. Office hours • appointment by email • welcome to stop by my office • Send specific questions by email

  13. Course Schedule(tentative)

  14. Course schedule August 28 Introduction Time value of money • Future value, present value, discounting stream of cash flows • Annuities, perpetuities, growing annuities and growing perpetuities

  15. Course schedule September 4 Time value of money continued September 11 Interest rates • APR, EAR, Amortizing loans • Nominal and Real interest rates • The Term Structure of Interest Rates Practice questions CH3,4 due

  16. Course schedule September 18 Investment Decision Rules • NPV, Payback period, IRR, EVA • Multiple investment opportunities • Resource constraints, Profitability Index Practice Questions CH5 due September 25 Pricing Risk • Risk and return • Expected return, Volatility • Calculating realized returns • Excess returns • Systematic and Idiosyncratic risk • Diversification • CAPM Practice questions CH6 due

  17. Course schedule October 2 Review Homework assignments and solutions with Ming the teaching assistant October 9 Stock Valuation Bond Valuation Practice questions CH10 and Data Case chapter 10 due October 12 Tentative Make up class 9:00-12:00 October 16 Final 6:00-9:00

  18. Questions before we start?