Modern Finance: Core Principles and Applications

This module provides a foundational overview of finance, covering the basic financial decisions made by households and corporations, different approaches to asset valuation, and the fundamental workings of financial markets. Students will also learn about financial frictions and the unifying principles that govern financial decision-making.

This module explores the state-space model for time and risk, security pricing principles, and fundamental concepts of present value calculation. Students learn about discount rates, time value of money, risk premiums, and practical applications of compound interest, including annuity and perpetuity calculations.

This module covers the fundamentals of fixed-income markets, including the term structure of interest rates, bond price properties, market conventions, and the relationship between inflation and real rates. Students learn how to analyze and value various types of fixed-income securities.

This module focuses on equity valuation methods, including the Discounted Cash Flow (DCF) model, Gordon model, and multi-stage growth models. Students learn to analyze stocks using various metrics such as earnings per share (EPS), price-to-earnings ratios (P/E), and present value of growth opportunities (PVGO).

This module examines decision-making under uncertainty, expected utility theory, and risk aversion concepts. Students learn about portfolio diversification, systematic and idiosyncratic risks, and the principles of risk management in investment decisions.

This module introduces factor models as tools for analyzing and managing risk in financial markets. Students will explore how multiple risk factors can systematically affect asset returns and learn the principles of Arbitrage Pricing Theory (APT). The module covers practical applications of APT in portfolio management, risk assessment, and asset pricing, providing students with advanced techniques for understanding the relationship between risk factors and expected returns.

This module explores the Efficient Market Hypothesis (EMH), its implications for investment strategies, and the empirical evidence supporting or challenging market efficiency. Students learn to evaluate market behavior and understand the implications for investment decisions.

This module introduces core concepts in corporate finance, including corporate financial decision-making processes, opportunity cost of capital, Net Present Value (NPV), and the financial objectives that guide corporate managers in their decision-making.

This module covers advanced topics in capital budgeting, including NPV rules, cash flow calculations, alternative evaluation methods, project interactions, and the relationship between capital budgeting and discount rates.