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The text book is Brealey, Myers, and Allen Principles in Corporate Finance. The newest edition. I think it is the 8th. I apologize up front for the price, but I can make it a bit better by telling you that we will also be using it for 402 and I highly recommend that you keep it for either other classes or for the real world as a reference. It is VERY good.

Course Overview
This class is aimed at an audience that has already a basic financial background. The class focuses on Corporate Finance but it is impossible to just look at corproate finance so there will be some (although limited) use of material from other classes.

I definitely recommend that you review your 301 notes and ideally look over your stats as well.

(btw For past students who are looking for notes on my website, this class is comparable to Fin305 at Penn State and somewhat comparable to Fin365 at JMU. )

Text
The text, Principles of Corporate Finance by Brealy, Myers, and Allen has a very useful site .

AFN = Required Increase in Assets
- Spontaneous increase in liabilities
-Increased in Retained Earnings

Increase in assets=(Assets/Sales)*change in Sales
Spontaneous Increase in liabilities = (Liabilities/Sales)*Change in sales

Papers on Market Efficiency
Virtually every finance paper has some discussion of market efficiency but some of the more inportant paperws devited soley to the topic include Ray Ball's Theory of Stock Market Efficiency: accomplishments and limitations. It is published as part of Chew's The New Corporate Finance. Additionally Fama, 1991, has an excellent summary article on market efficiency. Both of these are summarized on my summaries page.

Possibly less academic in nature but more convincing in reality is the fact that so few people or mutual funds either in the US, or abroad, actually beat the market on a risk adjusted basis.

To list all academic research on insier trading is beyond the scope of this class, but Bainbridge's look at Insider trading has a great Bibliography and literature review! Additionally there is insider trading and then there is insider trading. A look at Yermack's paper

A discussion of the good and bad of insider trading

From the blog: articles on insider trading.

Efficient, not omniscient
Although many in finance now believe that markets are efficient, it is not unanimous. One group of these people are technical analysts. These people believe they can predict price movements based on historical prices (a clear violation of weak form efficiency). Although the vast majority of academic papers finds no benefit to technical analysis, it has long been difficult to explain why there are technical analysts around (how can we say the market is inefficient in keeping technical analysts while say it is efficient in other things). Several recent academic papers have at least suggested that technical analysis might not be worthless. While others have followed with some excellent research, the main person here to remember is Lo. He has had two very good articles on technical analysis. To see the background try this from the Review of Financial Studies. He also has a JF paper with Mamaysky, Wang (JF)-- that concludes that technical analysis may not be as bad as we previously thought.

Here are some interesting links on technical analysis
The Equity Research Center has a nice page decribing the differences between technical and fundamental analysis
Marketscreen.com has a good review of what techincal analysis is and even provides some examples
Dean LeBaron should teach: He is interesting, looks at both sides, and usually gets it right! Here is his take on technical analysis.

Another big challenge to market efficiency (and the implied assumption of investor rationality) is behavorial finance. It is one of the hottest fields in finace now and there is mounting evidence suggests that investors sometime act irrationally. This may or may not be a problem. Remember that certain investors can act irrationally so long as the marginal investor (the one who sets the price) does not. However, as the evidence grows, many (including myself) are acknowledging that behavioral finance does play a role in how finance works. (That said, many of the behavioral finance stories can be refuted or at least questioned.--see Fama 98?) .

From the FinananceProfessor.com blog
       Brav, Heaton, and Rosenberg--both sides have merits
       Charoenrook-Sentiment may matter
       Fehle, Tsyplakov, and Zdorovtsov--On stock returns to Super Bowl Advertisers

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