9 units (3-0-6)
Prerequisites: BEM 103.
The main objective of the course is to develop insight into the process by which firms can create value for their shareholders. We will study major corporate decisions from the perspective of the firm with an emphasis on the interaction of the firm with financial markets: quantitative project evaluation for investment, choice between borrowing and issuing stock, dividend policy, organizational form (for example, mergers and acquisitions). Theory, empirical evidence, and case analysis all play significant roles in the course. Topics include discounted cash flow models, risk and return, capital asset pricing model, capital market efficiency, capital structure and the cost of capital and dividend policy.
The online version of the Caltech Catalog is provided as a convenience; however, the printed version is the only
authoritative source of information about course offerings, option requirements, graduation requirements,
and other important topics.