Introduction to Finance

Welcome

Nisan Langberg nlangberg@uh.eduOffice 210E

Teaching AssistantMing Chen mingchen2011@gmail.com

Goal

Equip students with the basic tools necessary for making efficient financial decisions while taking into account future cash flows and their risk.

MethodologyStudents will master the required theoretical tools and apply them to day-to-day decision of individuals (saving/retirement/mortgage…)

outline

• Logistics• Course schedule

Logistics

Class Material

On our website http://www.bauer.uh.edu/nlangberg/teaching_635.htm

Text book

I will teach and assign problems using the book Corporate Finance by Jonathan Berk and Peter DeMarzo, Perason

Alternative Reading

Further/alternative reading is Brealey, Myers and Allen, Principals of Corporate Finance, McGraw-Hill Irwin, 8th edition or higher

Buying the book?

I do recommend buying the book

• The course is built around the text book• Excellent reference book for those to plan to

work in the area of corporate finance• Taught in leading B schools around the world

Group Assignments

• I encourage work in groups• Groups are limited to four students

Grade

• Homework assignments: 30%• Data Case: 5%• Final exam: 65%

Office hours

• appointment by email• welcome to stop by my office• Send specific questions by email

Course Schedule

(tentative)

Course schedule

August 28IntroductionTime value of money• Future value, present value, discounting

stream of cash flows• Annuities, perpetuities, growing annuities and

growing perpetuities

Course schedule

September 4Time value of money continued

September 11Interest rates• APR, EAR, Amortizing loans• Nominal and Real interest rates• The Term Structure of Interest RatesPractice questions CH3,4 due

Course schedule

September 18Investment Decision Rules• NPV, Payback period,

IRR, EVA• Multiple investment

opportunities• Resource constraints,

Profitability IndexPractice Questions CH5 due

September 25Pricing Risk• Risk and return• Expected return, Volatility• Calculating realized returns• Excess returns• Systematic and

Idiosyncratic risk• Diversification• CAPMPractice questions CH6 due

Course schedule

October 2Review Homework assignments and solutions with Ming the teaching assistant

October 9Stock ValuationBond ValuationPractice questions CH10 and Data Case chapter 10 due

October 12Tentative Make up class 9:00-12:00

October 16Final 6:00-9:00

Questions before we start?