Crest Case

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Students are strongly encouraged to consult the Johns Hopkins Carey Business School Student Handbook and Academic Catalog and the School website http://carey.jhu.edu/syllabus_policies for detailed information regarding the above items.

Course Description

The goal of this course is to analyze the major decisions of a corporation. The course deals primarily with a firm's investment and financing decisions and the firm's interaction with capital markets. Topics include valuation of future cash flows and risk, capital budgeting, capital structure theory, and pay-out theory.

Course Overview

About 90% of total revenues in the US economy are generated by corporations. Understanding decision-making within a corporation, whether it is about the choice of investment or about how to raise capital to finance a specific investment, is fundamentally important to understand the key players in today's economy. This course provides the tools to understand efficient decision-making within a corporation by employing the notion of absence of arbitrage (i.e., the Law of One Price), namely the fundamental principle shaping all aspects of modern finance. While my goal cannot be to make you expert managers in eight weeks, you will be able to evaluate important corporate decisions coherently within the framework of the no-arbitrage principle.

Student Learning Objectives for This Course

All Carey graduates are expected to demonstrate competence on four Learning Goals, operationalized in eight Learning Objectives. These learning goals and objectives are supported by the courses Carey offers. For a complete list of Carey learning goals and objectives, please refer to the website http://carey.jhu.edu/LearningAtCarey/LGO/index.html.

The learning objectives for this course are:

1. You should be able to price future certain (and uncertain) streams of income.

2. You should be able to use effectively valuation methods when making capital-budgeting decisions.

3. You should recognize the financial and strategic implications of alternative corporate financing decisions in different environments.

4. You should recognize the financial and strategic implications of alternative corporate pay-out decisions in different environments.

5. You should understand agency problems in the context of corporate financing and pay-out decisions and their ethical implications.

Attendance Policy

Class attendance is mandatory. Each student should read the assigned materials and give careful thought to background