4/1 | Class 1 | Introduction to Options Option Terminology Understanding Option Price Data Option Strategies and Payoff Diagrams Put-Call Parity Reading: RWJ Chapter 21, pp. 571-580. |
4/3 | Class 2 | Arbitrage Bounds on Option Prices Definition of Arbitrage Arbitrage Bounds for European Options Early Excercise: American Options Reading: RWJ Chapter 21, and Class Notes |
4/8 | Class 3 | Elements of Option Pricing: The One
Step Binomial Tree Specifying an Arbitrage-Free Price Process Options as Stock-Bond Combinations Risk-Neutral Pricing Reading: RWJ Chapter 21, and Class Notes |
4/10 | Class 4 | Topics in Options The Multiple Step Binomial Tree The Effect of Early Excercise and Dividend Payments The Black-Scholes Formula Reading: RWJ Chapter 21, and Class Notes |
4/15 | Class 5 | Why Capital Structure Might be Irrelevant Miller-Modigliani (MM) Proposition I Corporate vs. Personal Leverage Arbitrage Arguments in MM Cost of Capital & MM Proposition 2 Reading: RWJ Chapter 15, pages 383-400 |
4/17 | Class 6 | Why Capital Structure is Relevant Corporate Taxes Limits to the Use of Debt Bankruptcy Costs Agency Costs Personal Taxes and the Miller Equilibrium Financial Slack and Pecking Order Theory The Weighted Average Cost of Capital Reading: RWJ Chapter 15, pp 400-410. RWJ Chapter 16 |
4/22 | Class 7 | Capital budgeting For Levered Firm APV, FTE and WACC Methods Reading: RWJ Chapter 17 |
4/24 | Class 8 | Dividend Policy The Process of Paying Dividends Why Dividend Policy is Irrelevant Why Dividend Policy Might Matter Taxes, Issuance Costs, Clientele Theories Signalling Reading: RWJ Chapter 18 |
4/29 | Class 9 | Wrap Up Corporate Securities as Options Financial Policy: An Overview |