Prerequisites:
Readings: In course packet – see below. Objectives: Students are expected to be able to explain whether a firm is profitable or not and identify the causes of a firm profitability or lack of profitability. Attendance policy: You are expected to come to every class. Do not schedule job interviews in a manner that prevents you from attending class. Grading: The numerical grades are translated into letter grades as follows: Make-ups: There will be no make-ups for missed coursework, assignments, and examination unless you receive the permission of the instructor prior to the date of the assignment or exam. Extra credit: There will be no extra credit assignments. Working together on homework: You are allowed to work with other students from the class on homework assignments; however, you need to follow the rules stated below. You have three options. (1) Work alone. (2) You can discuss the assignment with other students from the class, but without reading the other person’s write-up. (3) You can submit one homework set for a group of two or three students. If you choose the third option, each of you needs to have worked on each problem. I.e., you cannot split the work; you have to work on it together. If you work on the homework in any other way that specified in (1), (2), or (3) you are in violation of the honor code. In particular, if you have worked on previous assignments with a student, but that student does not contribute on a particular assignment (because they were sick, out of town, …), their name should not be included on the homework for that assignment. Reasonable accommodation statement: Any student with a documented disability needing academic adjustments or accommodations is requested to speak with me during the first two weeks of class. All discussions will remain confidential. Students with disabilities will need to also contact Disability Support Services in the Ley Student Center.
To purchase the course packet, go to: Homework: They are due on the date that they are listed on the syllabus. Homework sets must be typed. In Microsoft Word, you can easily add subscripts (keep the Ctrl key down while pressing the “=” sign), and superscripts (keep the Ctrl and Shift down while pressing the “=” sign). Do not email me copies of the homework. Excel refresher notes: You select a cell by putting the mouse pointer in that cell and then clicking it. When you select a cell, it is outlined in heavy lines, and a fill handle appears on the lower right-hand corner of the outline. To enter a function into a cell, select the cell and the type then formula starting with an = sign. For instance, to enter the formula “3*x,” enter =3*x. Note, it is crucial that you include the = and * signs. In a formula, you can reference a cell on your spreadsheet in four different ways. For, instance, if you want to refer to the cell B3, you can refer it to B3, $B3, B$3, and $B$4. The way you reference affect what happens to your formula when you copy it somewhere else on your spreadsheet. If you used B3, Excel will change both coordinates. If you used $B3, Excel will keep the first coordinate (“B”) unchanged, and change the second coordinate. If you used B$3, the first coordinate changes while the second remains the same. Finally, if you used $B$3, both coordinates remain the same. TENTATIVE SCHEDULE January 5, 7. Risk, utility, measures of risk aversion, securitization.. January 9. Profits maximization, elasticity, market segmentation. January 12. Turn in Homework 1. Read “Understanding Industry Structure.” January 14. Oligopoly. January 16. Nash, Cournot, Bertrand January 21. Turn in Homework 2. Extensions of Cournot January 23. Cooperative pricing. January 26. Entry deterrence, production. January 28. Turn in Homework 3. Profitability of the firm.January 30. Financial statement analysis.February 2. Ratio analysis.February 4. Turn in Homework 4. Risk & CAPM. Read: “Diversification, the Capital Asset Pricing Model, and the Cost of Equity Capital.”February 6. Catch-up/Review.February 9. Midterm I.February 11. Applying the CAPMFebruary 13. Leverage.February 16. Turn in Homework 5. Class presentations.February 18. Class presentations..February 20. Competitive advantage.February 23. Make or buy decision.February 25. Centralization/decentralization.February 27. Turn in Homework 6. Double marginalization.March 9, 11. Double marginalization.March 13. Turn in Homework 7. Franchising.March 16, 18. Franchising, hidden information.March 20. Turn in Homework 8. Hidden information.March 23. Hidden information.March 25. Catch-up/Review. March 27. Midterm II. March 30, April 1. Agency. April 3. Turn in Homework 9. Agency. April 6, 8. Compensation. April 10. Turn in Homework 10. Compensation. April 13. Stock options and executive compensation. April 15, 17. Catch-up/Review. |
