• understand why financial intermediaries exist, and discuss the role of transaction costs and information asymmetry theories in providing an economic justification • explain why banks need regulation, and illustrate the key reasons for and against the regulation of banking systems • discuss the main types of risks faced by banks, and use the main techniques employed by banks to manage their risks • explain how to value real assets and financial assets, and use the key capital budgeting techniques (Net Present Value and Internal Rate or Return) • explain how to value financial assets (bonds and stocks) • understand how risk affects the return of a risky asset, and hence how risk affects the value of the asset in equilibrium under the fundamental asset pricing paradigms (Capital Asset Pricing Model and Asset Pricing Theory) • discuss whether stock prices reflect all available information, and evaluate the empirical evidence on informational efficiency in financial markets. Essential reading
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This note was uploaded on 09/23/2009 for the course BUSI 101 taught by Professor Wormer during the Spring '08 term at Acton School of Business.