Handbook

This course focuses on the role and usage of financial instruments. We begin by discussing financial options and their applications in corporate finance. We then introduce a general valuation framework for option-like contracts and apply it to real options. In the second half of the course, we discuss the implications of frictions and agency problems for investment and capital structure. The central theme in this part is how financial contracts, such as convertible bonds, can help resolve frictions and agency issues. A comprehensive case concludes each major section of the course to illustrate practical applications of the concepts.