Corporate Investment Policy

This course examines the investment decisions faced by corporate managers. We begin by developing a general framework for corporate valuation, and then we use this framework to review and expand on the capital budgeting issues developed in the core finance course. For example, we review the foundations of option valuation, and then apply these tools to value real options. We also cover new material on estimating the cost of capital and the effects of leverage and taxes. In this course, you will learn the state-of-the-art tools and techniques for the evaluation of corporate investment decisions.

The course format is a mixture of theory, empirical evidence, and practical application. The theory provides the framework for our analysis. The empirical evidence provides a core of stylized facts to support our theoretical intuition. Practical applications put to use the theoretical foundations and empirical evidence in “real world” decision-making situations.