Survey of foundational concepts in finance; in particular, discounted cash flow analysis and its applications to valuation of bonds, stocks, and corporate financial assets. Introduction to the following topics: bond and stock markets; pricing mechanisms in those markets; relationship between risk and return; capital budgeting methods based on discounted cash flow valuation.
Course Credits: 3
Prerequisites: ACCT 6301 or the equivalent.
Student Learning Outcomes
By the end of this course, if you have been diligently reading the lectures and assigned readings and have been fully engaged in the assignments, you should be able to do the following:
- Describe how the bond and equity markets function in the United States. (Module I)
- Apply basic discounted cash flow formulas (a.k.a., time value of money models) using the algebraic formulas and Excel special functions. (Module II)
- Apply the bond valuation model and related tools in Excel to estimate bond value and bond yield. (Module III)
- Apply the capital asset pricing model to estimate investors’ required rate of return on a stock. (Module III)
- Apply the Net Present Value (NPV) Rule to make decisions about whether to accept or reject a capital project. (Module IV)
- Apply weighted average cost of capital (WACC) procedures to estimate the cost of capital for a corporation. (Module V)
- Explain why maximizing shareholder wealth should be the primary goal of financial managers at a corporation and describe the challenges to doing so. (Module VI).