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Advanced Corporate Finance

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					Corporate Finance
 Ronald F. Singer
   FINA 4330

Introduction Lecture 1
       Fall 2010
            Administration
• Instructor: Ronald F. Singer
• Phone: 713-743-4771
• Office Hours: Tuesday, 4:45 to 6:00 and
  Thursday, 4:00 to 4:45.
• Room 210F Melcher Hall
• Webpage: www.bauer.uh.edu/singer
          Class Administration
•   Exams
•   Late Entrants
•   Reading, Eating, etc.
•   Attendance
•   Texts:
    – Ross, Westerfield and Jaffe, Corporate
      Finance, 9th edition
    – Wall Street Journal
    Review of Principles of
    Financial Management
• Three areas of inquiry
 –Capital Budgeting
 –Capital Structure
 –Payout policy
           Efficient Markets
• Efficient Markets versus Perfect Capital
  Markets
         Capital Budgeting
• What is to be discounted?
• How do we discount?
• What is the decision rule and why?
   What determines the value of
            securities
• Security Pricing Models
  – Capital Asset Pricing Model (CAPM)
  – Arbitrage Pricing Model (APT)
  – Multifactor Model
  – Option Pricing or Contingent Claims Pricing
             Firm Valuation
• What determines the value of the Firm?
  – In a perfect capital market setting
  – In the “Real World”
          Capital Structure
• What is the Capital Structure Decision?
• What are the determinants of a firms’
  capital structure
• What do we have to consider?
            Payout Policy
• What is payout policy?
• What are the Issues?
• What factors are important?
                  Generally
• We look to violations of Perfect Capital
  markets: In particular:
  – Costly Information
  – Taxes
  – Agency Problems
     • Failure to align managements with stockholders’
       interest
     • Market for corporate control

				
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