This course provides an introduction to finance. The course starts with a brief discussion of the functions of financial systems, an overview of existing financial assets, financial intermediaries and markets and an introduction to firm types and firms' financial statements. A first part of the course deals with the time value of money and its applications: understanding interest rates and valuing bonds. The second part addresses investment decisions by firms and explains the basics of project and firm valuation. The course then introduces the notions of risky assets, risky returns and risk aversion and highlights the benefits of diversification. We present the foundations of portfolio theory and the central model of equilibrium asset pricing: the CAPM, before highlighting some of their important applications. The last part discusses the efficient market hypothesis and the contending theories of behavioral finance.
Jean-Stéphane MESONNIER,Victor SAINT-JEAN
Cours magistral seul
English
2-3 hours a week. Students commit to read at home the slides of each session and work through the numerical examples seen in class before coming to the next session. Students are also expected to train themselves by trying to solve the problem sets.
Math level corresponding to Sciences Po's first year course “Mathematics for social sciences: introductory level”. Basic knowledge of probability and statistics.
Autumn 2022-2023
The course will be assessed through a final exam (counting for 50% of the course grade) and quizzes taken in the first 10-15 minutes of class (50% of the grade). The dates of the quizzes will be confirmed at least one week in advance.
The lectures are based on slides which will be shared on the Moodle-page of the course. Problem sets with solutions will also be provided to deepen the notions learnt and to self-test.
J. Berck, P. DeMarzo, Corporate Finance, Global Edition, 3rd Edition, 2014, Pearson. [BdM]