An introduction to the study of the economic problem, the nature and method of economics, the operation of markets, and of the aggregate national economy. Develops the basic theories of macroeconomics and applies them to topics of current interest. Explores issues such as: the causes of inflation, unemployment, recessions and depressions; the role of government fiscal and monetary policy in stabilizing the economy; the determinants of long-run economic growth; the long- and short-run effects of taxes, budget deficits, and other government policies on the national economy; and the workings of exchange rates and international trade.
Prerequisites: None
In this course, students will be introduced to topics in corporate finance from the perspective of managing assets and liabilities of the balance sheet in making investment and financial decisions of corporations. The course begins with an overview of corporate governance and the alignment of management behavior with shareholder and societal interests, with attention paid to the role of corporations in society. Then, we consider asset management, including investment decision rules and capital budgeting. Topics of investigation include liability management, the capital asset pricing model (CAPM), cost of capital, and capital structure via the Modigliani-Miller theorem. In addition, dividend payout policy, mergers and acquisitions, and private equity will be discussed within the contemporary context of a fast-changing corporate world. The Bloomberg terminal is used extensively in application of these concepts to real-world data.
Prerequisites: Principles of Finance and Introductory Financial Accounting
Principles of Finance is an introductory course designed for finance majors. This course is composed of two parts. In this first part, students are introduced to basic concepts and terminology that are essential in understanding how financial markets operate. Topics include asset classes, risk and return, time value of money, bond prices and bond yields, equity valuation, options and futures, and modern portfolio theory. In the second part of the course, we broaden the perspective to examine how the financial system interacts with the macro-economy, focusing on recent trends of financialization, financial crises, and policies to promote financial stability, etc. By integrating these two parts, the course demonstrates how finance does not stand alone but is better understood within the broader context of the overall economy, history, and society.
Prerequisites: Introductory Microeconomics and Differential Calculus
An examination of the determinants of Gross Domestic Product, the unemployment rate and the price level. The components of aggregate spending consumption, investment, foreign trade and government will be examined to determine their significance for explaining the business cycle. Similarly the financial side of the economy and the role of money will be examined to determine their impact on the business cycle. The purpose of each examination is to understand the factors that move the economy and how fiscal and monetary policy can be used to alter the course of economic trends.
Prerequisites: Introductory Macroeconomics and Differential Calculus
Financial markets play an important role in allocating resources, managing risks and promoting or threatening macroeconomic growth and stability. The central idea of the class is the determination of asset prices in general equilibrium. This course introduces students to the institutional structure and economic reasoning for understanding investment theory and practice, security analysis, and financial intermediation as an application of asset pricing theory. The course concludes with a discussion of financial options, binomial asset pricing theory, and the Black-Scholes equation. If time permits, we will discuss collateral asset pricing and financial innovation, including mortgaged-backed securities, tranching, and credit default swaps.
Prerequisites: Intermediate Microeconomics and Multivariable Calculus