FIN-601: Theoretical corporate finance

Summary

The aim of this course is to expose students to important topics in the literature on corporate finance. The objective of the course is to give students a working understanding of key papers and to expose students to solution techniques to be applied in their own research.

Official source

https://edu.epfl.ch/coursebook/en/theoretical-corporate-finance-FIN-601

Moodle Page

http://go.epfl.ch/FIN-601

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Related concepts (31)

Investment policy

An investment policy is any government regulation or law that encourages or discourages foreign investment in the local economy, e.g. currency exchange limits. As globalization integrates the economies of neighboring and of trading states, they are typically forced to trade off such rules as part of a common tax, tariff and trade regime, e.g. as defined by a free trade pact.

Contract

A contract is an agreement that specifies certain legally enforceable rights and obligations pertaining to two or more mutually agreeing parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date. In the event of a breach of contract, the injured party may seek judicial remedies such as damages or rescission. A binding agreement between actors in international law is known as a treaty.

Stochastic calculus

Stochastic calculus is a branch of mathematics that operates on stochastic processes. It allows a consistent theory of integration to be defined for integrals of stochastic processes with respect to stochastic processes. This field was created and started by the Japanese mathematician Kiyosi Itô during World War II. The best-known stochastic process to which stochastic calculus is applied is the Wiener process (named in honor of Norbert Wiener), which is used for modeling Brownian motion as described by Louis Bachelier in 1900 and by Albert Einstein in 1905 and other physical diffusion processes in space of particles subject to random forces.

Asset pricing

In financial economics, asset pricing refers to a formal treatment and development of two main pricing principles, outlined below, together with the resultant models. There have been many models developed for different situations, but correspondingly, these stem from either general equilibrium asset pricing or rational asset pricing, the latter corresponding to risk neutral pricing.

Dividend

A dividend is a distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business (called retained earnings). The current year profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital.