Value-Based Management and Course Summary

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Value-Based Management andCourse Summary

• Week 15 December 4, 2002

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FBE 432 Case Course

• Goal Understand implications of financial
  theory in real situations
• Objectives Students take a position on a
  financial policy or strategy and defend their
  decision using financial theory
• By-product Gain exposure to a wide variety of
  financial issues in a broad range of market
  contexts (e.g. domestic and international) and
  many war stories

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Review Cases Investment Banking

• Eskimo Pie
• Continental Carriers
• Hostile Bid for Red October

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Review Cases Venture Capital

• The John Case Co.
• Trendsetters

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Review Cases Risk Management

• For risk management, we had more lecture coverage
  of technical background
• Measuring risk exposure
• Techniques for risk management
• Derivative securities futures and forward
  contracts, options, and swaps
• Liabilities Management at Union Carbide

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Review Cases Financial Strategy

• PPL
• Clarkson Lumber
• Avon Products

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Review Cases

• International Capital Markets
• Huaneng Power International
• Corporate Governance
• Circon (A)
• Value-Based Management
• Vyaderm

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Summary

• Value and valuation is the key in finance
• Cash flows, discount rates, and present values
  are the critical tools and assumptions for each
  are the main points of debate
• Accounting concepts (like income) and numbers are
  important inputs but finance is forward-looking
  and requires assumptions
• Finance theory is essential in framing a
  convincing argument, either as benchmarks for
  analysis or in assessing real-world departures
  from assumptions underlying finance theories

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Advice from Professor

• Common sense precedes careful analysis and
  analysis must be measured against plausibility
  and reasonableness
• It is important to enjoy what you are doing, more
  important than anything, do not adopt other
  peoples concept of success
• Balance is essential finance is a partial view
  of the world, your job is in many ways the least
  important part of your life

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Examination Dec. 13, 2002

• Format same as midterm (multiple choice and
  longer answer)
• Coverage is 2/3 on material since midterm and 1/3
  before midterm
• Two-hour examination final counts twice and
  midterm once, drop lowest of three
• Review weekly objectives and vocabulary
• Review syllabus to focus attention on important
  finance theories used in cases