Financial Management

3 units

Students will learn the basic tools and concepts to analyze corporate financial decisions, understand how a company's decisions affect shareholder value, and identify which decisions can increase it. Firms create value by earning more than their investors could expect to earn on comparable investments in the financial markets. We will therefore study basic principles of investing, including the time value of money and the relationship between risk and expected return. We then use these lessons to learn how to estimate a firm's cost of capital and how to value assets based on their projected future cash flows. Students will learn to apply this framework to value financial securities like stocks and bonds, corporate investment projects, and entire firms. We will also study how firms' financing decisions, such as the choice between debt and equity capital, affect shareholder value and risk. Students may not earn credit in both FIN 5203 and FIN 6203.