Asset Pricing and Corporate Finance I

The asset pricing section of the course introduces students to the main concepts and tools in the analysis of financial securities. It provides a general framework for understanding the valuation of various investment instruments traded on financial markets. A strong emphasis is put on understanding the concept of diversification and its implication for the tradeoff between risk and return. Following this analysis, the course develops the role and valuation methodology of derivatives securities, focusing on the notion of arbitrage.

The corporate finance section of the course introduces students to the main concepts and tools in corporate finance. It provides a market-oriented framework for analyzing investment decisions, capital budgeting principles, and the financial decisions of firms. Throughout the course, students will solve exercises and problems to enhance the understanding of the covered topics.

·       Analyze the risk/return tradeoff through the effect of diversification

·       Understand the components of the required rate of return for investment in a financial security

·       Understand the notion of arbitrage and its role in the valuation of derivative securities

Corporate Finance

·       Understand the tools and techniques for firms' investment and financial decision making

·       Understand the main methods for the valuation of corporate securities

·       Learn about firms' capital structure choices

 ·       Corporate Finance, by Jonathan Berk and Peter DeMarzo, 5th Global edition, Pearson.

 ·       Finance d’entreprise, Jonathan Berk et Peter DeMarzo, Edition française par Gunther Capelle-Blancard et Nicolas Couderc, 5^e édition, Pearson.

·       Lecture notes and exercises will be posted on the course website.

It is recommended that students taking this class have taken the course Financial Markets or Finance de marché.