Financial Management: Honors

  • 16-weeks
  • 3 credits
  • Prerequisite: W131, C104, C121, C204, K201, and X201, A100, A201, A202, L201, E201, G202, E202, E370, M118, M119, and X220 (all with a grade of C or better) and admission to the business honors program. 

Part of Honors I-Core. Broad survey of finance for all honors business students. Provides a conceptual framework for a firm’s investment, financing, and dividend decisions; includes working capital management, capital budgeting, and capital structure strategies.

Learning Objectives:

I. Risk and Return (Single-Period)    
    A. Utility    
    B. Lifecycle         
        1. Savings / Dissavings        
        2. Changes in Degree of Risk Aversion    
    C. Portfolio Math (Two Asset)    
    D. Diversification    
    E. Systematic Risk vs. Idiosyncratic Risk (Market Model)    
    F. Security Market Line
II. International    
    A. Exchange rate quotation conventions    
    B. Conversion of foreign currency to home currency    
    C. Simple exchange rate risk
III. Basic Description of Financial Markets    
    A. The Fed    
    B. Factors effecting long rates and short rates
IV. Time Value of Money (Multi-Period)    
    A. Work lots of examples, going from simple to complex        
         1. including personal finance examples
V. Cash Flows    
    A. Pro-forma projections    
    B. Financial statement to cash flow statement
VI. Capital Budgeting    
    A. NPV vs. IRR vs. payback    
    B. Do a buy vs. lease problem
VII. Working capital    
    A. Inventory, credit, and cash management
VIII. Options    
    A. Simple intro.    
    B. Qualitative comparative statics of option value  

Typical Text:  Fundamentals of Corporate Finance, Ross, Westerfield, and Jordan

Kelley School of Business

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