1. Value-Based Management and Course Summary
Week 15 – December 4, 2002 1

2. 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”

3. Review Cases: Investment Banking
Eskimo Pie
Continental Carriers
Hostile Bid for Red October

4. Review Cases: Venture Capital
The John Case Co.
Trendsetters

5. 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

6. Review Cases: Financial Strategy
PPL
Clarkson Lumber
Avon Products

7. Review Cases: International Capital Markets Corporate Governance
Huaneng Power International
Corporate Governance
Circon (A)
Value-Based Management
Vyaderm

8. 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

9. 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 people’s 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

10. 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