In teaching the MBA core course in finance, I have identified what I believe are the 20 main principles that a student should learn in this course. Here they are in the form of a question, with links to the answers.
What is financial management?
2. Who do companies represent?
3. What happens when the board and management do not do a good job for the shareholders?
4. What should be the objective of the firm?
5. How does money paid at one point in time differ in value from money paid at another point in time?
6. What determines the value of a stock or bond?
7. What are the components of the price of a stock?
8. What criterion should be used in deciding whether to make a particular capital investment?
9. How are the cash flows in a capital investment analysis determined?
10. How do investors decide which securities and portfolios to hold?
11. How are expected returns on risky assets determined?
12. What rate should companies use to discount risky capital investment projects?
13. Are financial markets efficient and what does market efficiency means?
14. In a world of no taxes or market imperfections, does the use of debt matter?
15. In a world with taxes and market imperfections, does the use of debt matter?
16. In a world of no taxes and market imperfections, does a company's dividend policy matter?
17. In a world with taxes and market imperfections, does a company's dividend policy matter?
18. Why do companies issue many different types of securities?
19. Do diversification and mergers by corporations benefit shareholders?
20. What are options?
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Last updated: May 27, 2012