# ECON 435

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UVA Notes > **ECON 435**

## Contents

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## Corporate finance lecture notes

### 9/23/2005

- ECON 435: Financial Ratios
- ECON 435: Present and future value
- Includes calculations with compounding interest

- NOTE: Make sure you understand Quiz 4 on the slides
- uses above calculations to calculate return on an $300 investment

### 9/26/2005

- ECON 435: Effective annual rates
- ECON 435: Amortization rules
- ECON 435: Sample interest problem
- ECON 435: Bond features & pricing
- ECON 435: Bond ratings

### 10/7/2005

- ECON 435: Bond features & pricing
- ECON 435: Bond ratings
- ECON 435: Inflation and interest rates
- ECON 435: Terms & forumlas to know for the test
- ECON 435: Stock valuation

### 10/10/2005

- ECON 435: Common & Preferred Stock
- ECON 435: Net Present Value & Other Investment Criteria
- ECON 435: nothing here

### 10/21/2005

*I was absent this day...*

- Big point:
- Quantification of risk and return is a crucial aspet of finance. Value maximizing decisions require an understanding of risk & return.

Capital Market Efficiency

### 10/24/2005

ECON 435: Capital market efficiency Efficient market hypothesis Actual capital markets are actually efficient. Therefore all transactions involving security markets are zero NPV transactions.

- Two situations where transaction is not non-zero NPV:
- You have information the market doesn't have
- By doing reserach
- By being an insider

- You engage in a non-rational transaction

- You have information the market doesn't have

- Three forms of market efficiency
- Strong form efficiency
- Security prices already reflect all information that exists, no insider trading!

- Sem-strong form efficiency
- Prices refelct all public information.

- Weak-form efficiency
- The prices at least refect past prices. Therefore, statistics have no value.

- Strong form efficiency

### 11/10/2005

Took notes on ppt slides 13 & 15