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Session 2 (Undergraduate): More themes in corporate finance and introducing its objective
Description
In this class, we began by looking at two other themes that animate corporate finance: that it is universal and that no one can violate its first principles with immunity. We then started on what the objective in running a business should be. While corporate finance states it to be maximizing firm value, it is often practiced as maximizing stock price. To make the world safe for stock price maximization, we do have to make key assumptions: that managers act in the best interests of stockholders, that lenders are fully protected, that information flows to rational investors and that there are no social costs. Next week, we will rip these assumptions apart and look at what can go wrong.
Slides: http://www.stern.nyu.edu/~adamodar/podcasts/cfUGspr16/Session2.pdf
Post class test: http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2atest.pdf
Post class test solution:http://www.stern.nyu.edu/~adamodar/pdfiles/cfovhds/postclass/session2asoln.pdf
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