The major topics covered in this course are:

• CRITERIA FOR MAKING AN INVESTMENT DECISION
  • Net Present Value Rule
  • Payback Period Rule
  • Internal Rate of Return Rule
  • Benefit/Cost Ratio Rule
  • Accounting Measures
• PORTFOLIO ANALYSIS
  • Stochastic approach to portfolio selection
  • Expected rate of return
  • Risk as standard deviation of the
    rate of return
  • A risk free security
  • The Separation Theorem
  • Diversification
• CAPITAL ASSETS PRICING MODEL
  • Optimum portfolio of common stock
  • Equilibrium in the financial market
  • The market portfolio as the optimum portfolio
  • The market line
  • Beta theory
• MODIGLIANI AND MILLER'S PROPOSITIONS
  • Stock price and dividend payout ratio
  • Rate of return on equity and the leverage ratio
  • Optimal capital structure
  • Valuation of corporations
• OPTIONS THEORY
  • Definition of calls and puts
  • Payoff profiles for options
  • Put-Call parity
  • Black and Scholes formula
  • Convertible bonds
• LEVERAGED BUYOUTS
• JUNK BONDS

  TEXT:
  Peter Bernstein, Capital Ideas