公司财务精品教学（徐江旻）Session15 Review.pdfVIP

Review Takeaways from the class • Practical content: Finance is about Decision Making – At firm level (capital budgeting, real options, MA; capital structure – leverage, valuation, IPO’s) – For your own investments (stocks, bonds, options, DCF valuation) • Real-world examples to understand concepts: – Cases [Callaway, Orange County, Interco, Sealed Air, Valuation (Walmart), Apex International] – Problem sets with real company (e.g. Amazon), macro, financial markets data – Examples in lectures, articles • Theoretical foundations – The principle of arbitrage (4 entrepreneurs - lecture 1, bonds the yield curve, MM, option pricing and replicating portfolios) – Leverage, agency problems, asymmetric info mkt imperfections Snapshot of Exam Material • Options • Put-call parity, early exercise • Binomial model (valuation), dynamic replication (replicating portfolios) • Black-Scholes not required, but useful for your own knowledge • DCF valuation • Calculating cash flows, WACC, going from firm value to share price • Investment and growth, synergies in MA • Capital structure • Modigliani-Miller with w/o taxes: leverage and cost of capital/equity • tax shields/APV, bankruptcy costs, agency costs, asymmetric info • MA, leveraged buyout, security issuance and IPO • Material before midterm: capital budgeting, stocks, bonds Options: Put-Call Parity For European options (no dividend): p + S = PV(K) + c Example: A European call on Google with a strike price $800 and expiration 2 years from today is currently trading at $50. If the current price of Google stock is $820, and the risk-free rate is 5%, what is the price of the European put with the same strike price and expiration 2 years from today? What if Google pays a dividend of 10 in year 1? Options: Dividend Early Exercise