Theory of finance-II

2020/2021

Academic Year

ENG

Instruction in English

6

ECTS credits

Delivered at:

Department of Economics

Course type:

Elective course

When:

4 year, 1, 2 module

Instructors

Baklanov, Artem

Panov, Mikhail

Course Syllabus

Abstract

The first part of the course will be devoted to the corporate finance theory, i.e., to the financial theory of the firm. We will study the principles of optimal investment decisions by the managers of the firms, as well as the importance of choosing optimal capital structure. The second part of the course will be devoted to the theory of asset pricing. We will start with the fundamental theorem of asset pricing, which we then apply to deriving values of various financial securities

Learning Objectives

• focuses on the two basic elements of the modern theory of finance, the corporate finance theory and the asset pricing theory.

Expected Learning Outcomes

• learn the key concept of the financial theory of the firm
• be able to evaluate various investment decisions of the firms’ management
• learn how to evaluate the shared of publicly traded corporations
• be able to price various financial instruments

Course Contents

• Financial Statements
• Discounted Cash Flow
• Capital Investment Decisions
• Stock Valuation
• Risk and Return
• The Capital Asset Pricing Model
• The Arbitrage Pricing Theory
• Cost of Capital
• Market Efficiency
• Capital Structure
• Arbitrage and Equivalent Martingale Measures
• Derivatives
• Binomial Options
• Fixed Income Markets
• Speculative Investor Behavior

Assessment Elements

• 6 problem sets
• final-exam

Interim Assessment

• Interim assessment (2 module)
  0.3 * 6 problem sets + 0.7 * final-exam

Bibliography

Recommended Core Bibliography

• Brealey, R. A., & Myers, S. C. (2012). Principles of corporate finance. Slovenia, Europe: Irwin. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsbas&AN=edsbas.BA880E76

Recommended Additional Bibliography

• Kiyoshi Kanazawa, Takumi Sueshige, Hideki Takayasu, & Misako Takayasu. (2018). Kinetic Theory for Finance Brownian Motion from Microscopic Dynamics. Papers. Retrieved from http://search.ebscohost.com/login.aspx?direct=true&site=eds-live&db=edsrep&AN=edsrep.p.arx.papers.1802.05993