AEM 2241 - Finance

(crosslisted) PAM 5620

Fall, spring. 3 credits. Letter grades only.

Prerequisite: AEM 2100, AEM 1200, and AEM 2210, or equivalents. Priority given to: Dyson Minors, University-wide Business Minors, and CALS students.

R. T. Curtis.

This course is a survey of topics in finance. It focuses on the mathematics of finance, valuation, the economics of managerial decisions, corporate financial policy, risk management, investments, and personal finance.

Outcome 1: Become familiar with the “Time Value of Money” and comfortable using that concept and formulas to solve problems in the areas of corporate finance, investments, and personal finance.

Outcome 2: Become familiar with stock and bond markets and learn the economics and mathematics behind the valuation of bonds, stocks, and firms.

Outcome 3: Become familiar with modern portfolio theory including the relationship between risk and return, the concept of diversification, the capital asset pricing model, and the arbitrage pricing theory.

Outcome 4: Become familiar with corporate financial decisions such as whether to accept or reject a project (“Capital Budgeting”), how to finance operations (“Capital Structure”), if and how to make payouts to investors (“Distribution Policy”), and how to analyze potential acquisitions (“Mergers & Acquisitions”).

Outcome 5: Become familiar with using derivatives as investment and risk management tools. Derivatives covered include options, convertibles, forward and futures contracts, and swaps.

Outcome 6: Become familiar with the concept of market efficiency and the data in support of the theory. Also become aware of tests suggesting the existence of market anomalies which run counter to the notion of market efficiency.

Outcome 7: Become aware of some basic investment concepts and strategies.

Outcome 8: Become aware of some basic personal financial decisions including the use of tax-advantaged retirement accounts such 401(k)’s and IRA’s, asset allocation, saving for educational expenses, insurance decisions, and ways to pass assets on to one’s heirs.

Outcome 9: Become aware of current financial and economic events.