Financial Mathematics

After this course students should be able to: Objective 1: Understand the difference between equity and debt. Objective 2: Find the optimal capital structure of a firm. Objective 3: Understand the effect of taxes on the value of firms and on their optimal capital structure. Objective 4: Understand the impact of agency problems in the ability of firms to raise funds. Objective 5: Understand the basics of bond and stock pricing.

Class 1: Introduction to Corporate Financing. The capital structure of a firm: Modigliani&Miller's propositions. Class 2: Capital structure with taxes. Class 3: Agency conflicts: Borrowing in the presence of adverse selection and moral hazard. Class 4: Problem Set resolution: block I. Class 5: Bond and Stock pricing Class 6: Problem Set resolution: block II.

(i) 15 hour recitations, where the course instructor will explain the theoretical foundations of the course and will solve some selected exercises of problem sets. (ii) Resolution of problem sets by students, to be conducted by students independently off classroom. (iii) Office hours, where individual doubts will be addressed. Use of Artificial Intelligence (AI): The use of AI is allowed but not compulsory. Please be aware that, while AI tools can be useful to enhance your access to information and learning, you should try to take advantage of it to enhance your independent research skills, develop your critical thinking, and make your own assessment of the issues researched. Please also be aware of the reduction in the originality of your arguments and the risk of plagiarism that exists when you overrely on AI tools to generate content.