ECON 317(S) Finance and Capital Markets

A survey of business finance, managerial decision-making, and the stock market and other capital markets. Capital markets' social function in allocating resources, redistributing risk, facilitating investment, and providing incentives for managers. Major topics include: risk and return trade-offs; models of stock and bond prices; the capital asset pricing model; cost of capital; models of firms' decisions on investments, mergers, debt, and dividends; options and futures; "efficient markets" theories of the stock market; financial statement analysis. Each student writes an extensive case study of some U.S. firm and the stock market's valuation of it. Open to sophomores. Prerequisites: two courses in economics. Enrollment limited to 25.