Web Casts: Corporate Finance- Spring 2005

The 26-session corporate financeclass will be taped starting January 24, 2005 and the lectures will be available as Real Player files (You can download Real Player for free by going to http://www.real.com). You can get the supporting lecture notes by clicking on the pdf files below - the pages covered by each lecture are provided next to each lecture. The quality of the video and audio leaves much to be desired but it will get better over time. You can download the lecture notes that I will be using for the classes below. For the syllabus and other details, visit the home page for the class.
Lecture note packet 1: Management Objectives and Investment Analysis (Sessions 1-14: Download pdf file. You can also get two slides per page, if you want to save paper.) Updated for Spring 2005 class
Lecture note packet 2: Capital Structure, Dividend Policy and Valuation (Sessions 15-26: Download pdf file). You can also get two slides per page, if you want to save paper.) Updated for Spring 2005 class

Session (Click here) Topics covered Lecture notes
1 (1/24/05) Introduction to Class
First Principles of Corporate Finance

Syllabus for class
Project Description

2 (1/26/05)

Maximizing Stockholder Wealth as an objective
When stock price maximization is the only objective you need
Stockholders and Managers: Who has the power?

Packet 1 (1-20 )
3 (1/30/05) Overpaying on an acquisition
Unprotected lenders
Fraudlent and Delayed Information
Social Costs and Benefits
Alternatives to Stock Price Maximization
The Self Correcting Aspect of Stock Price Maximization
Packet 1 (20-50)
4 (2/2/05) Choosing an Objective
Measuring Hurdle Rates
- Defining Risk
- Measuring Risk
- The Capital Asset Pricing Model
- Alternatives to the CAPM
Packet 1 (51-67)
5 (2/7/05) More on the Marginal Investor
Riskfree Rates
Risk Premiums
- Intuitive Rationale
- Approaches
Packet 1 (68-83)
6 (2/9/05) Risk Premiums for Emerging Markets
Implied versus Historical Risk Premiums
- Setting up the regression
- Regression Diagnostics
Packet 1 (84-103)
7 (2/14/05) More Regression Diagnostics
Regression: Which index to use?
Determinants of Betas: Type of Business
Packet 1 (104-118)
8 (2/16/05) Operating leverage
Financial Leverage
Betas as weighted averages
- Betas after mergers
- Bottom up betas
Packet 1( 119-135)
9 (2/23/05) Take the quiz(a or b), check the solution (a or b) and compare your score to the distribution
Estimating bottom up betas for emerging market and financial service companies
Estimating costs of equity for private companies
Packet 1 (136-142)
10 (2/28/05)

Estimating the cost of equity for a private firm
What is debt?
The cost of debt
- Synthetic ratings
- The tax advantage
Estimating market values for debt and equity

Packet 1 (143-158)
11 (3/2/05) Measuring Returns
- Earnings versus Cashflows
- Return on capital
Packet 1 (159-181)
12 (3/7/05) Incremental Cashflows
NPV versus IRR
Packet 1 (182-210)
13 (3/9/05) NPV: Adjusting for country risk
Currency choice and NPV
Real versus Nominal NPV
Opportunity costs
Packet 1 (211-236)
14 (3/21/05) Options in Capital Budgeting
The Financing Mix Question
Advantages of Debt
Packet 1 (237-End)
Packet 2 (1-12)
15 (3/23/05) Disadvantages of Debt
The Trade Off revisited
The Miller Modigliani Proposition
Ways of coming up with an optimal
Packet 2 (13-37)
16 (3/28/05) Take the quiz (a or b) and check the solution (a or b). Check your score against the distribution.
The Home Depot Case Analysis
First Steps in Optimal Capital Structure

Home Depot Analysis
Packet 2 (38-45)
17 (3/30/05) The Cost of Capital Approach: Optimal Debt Ratio
Firm Value and Stock Price Changes from Recapitalization
What if something goes wrong?
Packet 2 (46-62)
18 (4/4/05) Investing additional debt instead of buying back stock
The Cost of Capital Approach - Financial Service firms
Normalizing Earnings
Private Firms
The APV Approach
Relative Analysis
Packet 2 (63-85)
19 (4/6/05) Life Cycle Approach to Optimal Capital Structure
Moving to the Optimal
Packet 2 (86-97)
20 (4/11/05) Designing the Perfect Bond Packet 2 (98-117)
21 (4/13/05)

Macroeconomic Regressions and Debt Design
Dividend Policy
- Paradigms
- Schools of Thought

Packet 2 ( 118-143)
22 (4/18/05)

The tradeoff on dividend policy
- The Tax Effect on Dividends
- Bad reasons for paying dividends
- Good reasons for paying dividends
Measuring FCFE

Packet 2 (144-167)
23 (4/20/05)

Take the quiz (a or b) and check the solution (a or b). Check your score against the distribution.

Analyzing dividend policy

Packet 2 (167-185)
24 (4/25/05) Valuation
- Equity versus Firm Valuation
- Discount Rates
- Cash Flows
- Expected growth rates
Packet 2 (186-216)
25 (4/27/05) Terminal Value
Valuation Examples
Tying valuation to corporate finance
Packet 2 (217-246)
26 (5/2/05) A Review of Corporate Finance
A Project Summary
  Take the final exam and check the solutions.