Global Arc

This course concerns the motives and methods of corporate actions such as dividend payments, share repurchases, recapitalizations, acquisitions, divestitures, joint ventures, with a focus on the implications of such actions for the prices of a corporation's publicly traded securities. The course should be of particular interest to students considering a career in financial services. Introductory courses in micro economics, investments, and probability and statistics are prerequisites. One 3-hour seminar.

A study of models for the term structure of interest rates, bond prices and other contracts such as forwards and futures, swaps and options. The course develops the theory of arbitrage-free pricing of financial assets in continuous time, as well as special models that can be used to price and hedge fixed income securities. Prerequisites: ECO 362 (or FIN 501) and ECO 465. One three-hour lecture, one precept.

The way in which financial markets work and securities are traded can often not be reconciled with the notion of a frictionless and self-equilibrating market. In this course, we try to account for this fact and cover important theoretical concepts and recent developments in market microstructure, asset pricing under asymmetric information, financial intermediation, and behavioral finance. Topics include market efficiency, market making, financial regulation, asset price bubbles, herding, and liquidity crises. Prerequisites: 300 or 310.

This course discusses how inefficiencies arise due to psychology and limits to arbitrage. The psychology of investors shapes their preferences and may impair judgment. Whether these psychological factors have an impact on financial markets ultimately depends on arbitrageurs' ability to fight against mispricing. These issues will be covered through lectures and exercises that will foster discussions about cognitive illusions and speculative bubbles. Prerequisite: 300 or 310. 362 recommended.

The objective of this course is to teach valuation methods. Topics include financial statement analysis, capital budgeting methods, estimating cash flows, estimating various costs of capital, valuation of projects, valuation of companies and security valuation, LBOs, mergers and acquisitions, valuing a drug licensing opportunity, the initial public offering valuation and valuation of strategic and real options. Two lectures, one precept.

This course will explore in some detail a diverse range of applications of game theory drawn from a wide variety of fields in economics. The latter include finance (no trade theorems on the one hand and bubbles and crashes at the other extreme), industrial organization (oligopolistic collusion), information economics (herd behavior), behavioral economics (time inconsistency and procrastination, self control and self confidence, psychological games and applications to issues of fairness, and feelings of guilt), matching markets (resident matching with hospitals, school choice and kidney exchange), auctions (design of spectrum auctions).

A survey of the concepts and techniques that non-managers use to hold the managers of organized human activity--chiefly corporations--accountable for the resources entrusted to them. Alerts students to the judgments and assumptions that regulators and managers make in that process, even when the managers wish to report honestly. Explores the methods that the managers of resources can (and often do) use to lie about their actual performance. To become sophisticated users, not producers, of financial state¬ments, students must master some record keeping procedures and vocabulary in order to exercise proper oversight of managerial behavior.

This course will teach students about financial risk management through the lens of the financial crisis that began in August 2007. Topics covered will include market risk, credit risk, liquidity risk, and systemic risk. Students will draw on their background in economics, finance, probability theory and statistics. The class will be in seminar format and active participation in the discussion is encouraged. Prerequisites: 362 and 465.

This course will use economic theory and empirical evidence to study the causes of financial crises and the effectiveness of policy responses to these crises. Particular attention will be given to some of the major economic and financial crises in the past century and to the crisis that began in August 2007. Prerequisite: 202 or equivalent, and 310.

With its rapid economic growth in the past three decades, China already has the world's second largest economy. Meanwhile its financial markets are also being quickly liberalized and integrated with the rest of the world. As the current trend continues, there are growing interests to learn and understand the workings of China's financial and monetary systems. This course aims to serve this objective with a particular emphasis on understanding the role provided by the financial system in facilitating China's economic development, in addition to the investment opportunities and risk presented by the system to the outside world.