- Students can understand and apply moral hazard and adverse selection models to analyze capital structure of firms.
- Students can set up and solve the loan agreement between an enterpreneur and a financier both in the fixed investement and the continous investment model.
- Students can extend the above mentioned models to incorporate debt overhand.
- Student sunderstand the importance of signalling in corporate finance.
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Credit rationing, moral hazard, adverse selection, Fixed-investment model, debt vs. Equity, equity multiplier, continuous investment model, debt overhang, renegotiation, diversification, cross-pledging, asymmetric information, pecking order model, signaling in corporate finance, underpricing, recent topics in the literature regarding the financing of corporations.
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