Introduction in Finance

2020/2021

Учебный год

ENG

Обучение ведется на английском языке

6

Кредиты

Кто читает:

Отдел сопровождения учебного процесса в Совместном бакалавриате ВШЭ-РЭШ

Статус:

Курс по выбору

Когда читается:

4-й курс, 3, 4 модуль

Преподаватель

Шпренгер Карстен

Course Syllabus

Abstract

This course is a first course in finance and will first give an overview over the most common financial instruments, contemporary financial markets and financial intermediaries. In what follows, it covers the basic topics in Corporate Finance and Investments. Core concepts will include the time value of money, opportunity costs, arbitrage pricing, bond valuation, stock valuation, concepts of risk, portfolio theory, asset pricing, market efficiency, and capital structure. Financial markets and corporations generate a large quantity of data. An important part of the course will be to visualize and analyze price data for different financial instruments (stocks, bonds, indices, derivatives). The programming language of choice for this course is R, and you are highly encouraged to learn its basics. This gives you a single tool to perform such diverse tasks as data visualization, finding polynomial roots (e.g., an internal rate of return), bond valuation, portfolio optimization, estimating factor models, and derivative pricing.

Learning Objectives

• After learning the course, students will know necessary basics for evaluating different management decisions and their influence on corporate performance and value; how to analyse corporate behaviour in capital markets and the relationship of agent and principal in raising funds, allocating capital, distributing returns.
• Students will be able to work with information from a variety of sources, especially data from financial statements and financial data from open access; generalise and discuss the results of theoretical and empirical studies and to reveal the possible directions for further research in examined area.
• Students will have skills of applying different models to value company’s assets and capital; justify the efficiency of company’s strategic decisions (investment decisions, financing decisions, payout decisions) and make recommendations; reveal and analyse factors affecting company value.

Expected Learning Outcomes

• The main objective of the course is to provide the conceptual background for corporate financial analysis from the point of corporate value creation. The course develops theoretical framework for understanding and analysing major financial problems of modern firm in the market environment.

Course Contents

• Introduction
  • A short history of finance • The main financial instruments • Contemporary financial markets • Financial intermediaries • Financial data: sources, visualization, preliminary analysis
• Interest rates and compounding, Present value and future value, Some shortcuts: annuities and perpetuities
• A Simple Theory of financial markets: The Fisher model
• Stock valuation: The dividend discount model
• Financial statements
• Capital budgeting
  • NPV rule, IRR rule and others • From financial statements to cash flows • Valuation with comparables and financial ratios
• Bond valuation, term structure and interest rate risk
  • Bond price and yield to maturity • The shape of the yield curve • Interest rate risk: Duration and convexity • Immunization of a bond portfolio against interest rate risk • Default risk
• Derivatives: Forwards, futures, swaps, and options
• Risk and return
  • Measures of risk and risk aversion • Mean-variance optimal portfolios • The Capital Asset Pricing Model (CAPM) • Factor models and the Arbitrage Pricing Theory (APT) • Portfolio performance evaluation
• Market Efficiency
  • The Efficient Markets Hypothesis • Event Studies • Behavioral Finance
• Capital Structure and Payout Policy
  • Corporate Claims • Capital structure in a perfect market and the Modigliani and Miller theorem (the Fisher model revisited) • Imperfect markets: Taxes, bankruptcy costs, agency problems, asymmetric information • Tradeoff theory • Valuation with debt (time permitting)

Assessment Elements

• Class participation and attendance
  Full credit for meaningful participation in class discussions
• Homework assignments
  One assignment every 1-2 weeks. Each homework assignment should be submitted via ny.nes.ru (unless otherwise stated) before the due date and time. Homework assignments turned in more than 1 minute late and less than 24 hours late receive a penalty of 20%. Assignments more than 24 hours late receive zero points.
• Mid-term test
  Should a student miss the mid-term or the final test, if NES/HSE administration has verified that the reason is legitimate, the student may take a comprehensive test, covering all material in the course, which can replace the mid-term or the final test.
• Final test
  There will be online proctoring at ZOOM Platform. The conference will be recorded. When suspicions of a violation of academic ethics arise, the administration reserves the right to review the video to decide if any action is necessaryBefore the exam you need to prepare 2 devices. One device with the camera and ZOOM conference, and the second one you will use to read the test.Before entering the conference, install the device with the camera so that the camera captures you at the desk where you will be writing answers on paper, and the screen of the device from which you will be reading the tasks.Attention! At the beginning of your final test please write the following statement: I, YOUR NAME, hereby confirm that I have carefully studied and understood the rules of the exam and that I shall comply with them. Please sign and date the statement. Without a signed pledge/statement, no score would be given to the test.Common rules • Upon entering ZOOM, please type your full name. • Switch off notifications of all messengers and social networks on the device that will be used during the test. Pop-up notifications can be qualified as an attempt to communicate. • Switch on the microphone on the device used for ZOOM. Switch off all loud devices (TVs, alarm clocks etc.) and make sure there are no other noise sources in the room where you are taking the exam. • Questions can be asked through Google Form - the link will be send to you before the exam. If you have a question, raise your hand, and after the proctor’s permission you can type your question into the form. The proctor will inform you when you can see the answer. Questions and answers will be deleted after the student sees his/her answer.Do not: • Use any materials except blank sheets of paper for your draft and pocket calculator • Have outsiders in or out of the camera view • Communicate with other people, except the proctor • Leave the camera view during the exam • Switch off the camera and microphone during the exam • Have books or other documents on the desk, except for draft sheets and the final copy • Open any windows or screens on the device from which you are reading the task, except for the task itself and the Google Form for questions to the proctor • Use headphones and smartwatchProctor • There will be a proctor in each virtual room • Before the exam you need to show to the proctor your room, desk, paper pads, and other materials, if any, that are allowed during the exam • The proctor may invite you to show your paper pad, the draft, or the screen of the device with the task at any time during the exam, calling you by the name via his/her microphone • You must open the task only when the proctor instructs you to do so. After that you will have 120 minutes for the test. • The proctor will keep you informed of the remaining timeHow to upload the test • After the proctor announces the end for the exam, you will have 10 minutes to scan and download your test to my.nes. At this point it is allowed to leave the ZOOM conference. • Tests not uploaded within the 10-minute slot won’t be evaluated. • If you have technical problems with uploading the test to my.nes, please email your work to esantonova@hse.ru or lmedvedeva@nes.ru within the same time limit. • The uploaded file should be clear and readable. • Unreadable test won’t be evaluated • Your test must be saved as Last Name_Name (e.g. Ivanova_Anna). • To scan the test you can use Google Disk for Android or Notes for Apple. It is also allowed to use another application of your choice which produces a good quality scan.

Interim Assessment

• Interim assessment (4 module)
  0.1 * Class participation and attendance + 0.45 * Final test + 0.2 * Homework assignments + 0.25 * Mid-term test

Bibliography

Recommended Core Bibliography

• Investments, Bodie, Z., 2005
• Investments, Bodie, Z., 2008
• Investments, Bodie, Z., 2014

Recommended Additional Bibliography

• Corporate finance, Berk, J., 2014