block 3 term 2 class summary
Day 1
Finance
Class 6 of Finance started to introduce the concepts of risk, diversification and portfolio choice. The big question for block 3 is “What is the right discount rate for a risky project”
We will need to know the “riskless rate” from the yield curve (per previous Bonds class) and then find the risk premium – 1) the amount of risk in the investment and 2) The market price of risk.
Today’s class focused on how to ensure a diversified portfolio and we must dig back out some of our knowledge from Data and Decisions for this since it includes looking at variance and standard deviation to help calculate the risk in cash flows.
Macro
Don reviewed some of the concepts that were covered in the Midterm.
Then the topic for today’s lecture was long run growth and fiscal policy, with discussion on deficits and how much is too much.
Entrepreneurship & Innovation Immersion
Ended Day 1 with an exciting introduction to the next immersion on Entrepreneurship and Innovation. We learned about a lot of the logistics from Kirsten and what to expect. Then we heard from a panel of past students who have completed the immersion who gave us plenty of tips on how to prepare (main tip – make sure you read, do research and show up to meetings with CEO’s and founders prepared and ready to have insightful conversations). Also keep an open mind about what you can get out of this course even if you think you don’t want to be an entrepreneur. Finally professor Sharat Raghavan introduced the course and led us through an exercise on selecting a product concept and market.
Day 2
Finance
Day 2 of Finance and we moved onto the CAPM – Capital Asset Pricing Model. This helps us determine the cost of capital – including both the risk of the investment and the market price of risk.
Marketing
Our first Marketing class of the block and today we covered Product Mix decisions. This included looking at the core job, the tangible POP’s and the augmented POD’s. We also reviewed the typical adoption curve and overall how to arrive at the right Marketing Mix.
Macro
Continued discussion on long run growth – pictures of different cities – some have grown immensely while others have barely changed – understanding why this is.
The Solow model provides insights to growth. Technology and innovation impact growth and can be modelled with Solow.
The final assignment for Macro is the Country Project which we will present in class during Block 4.
Day 3
Marketing
Saturday morning Marketing class always seems to have a quant focus – today was Marketing Math which includes calculating fixed and variable costs, prices and mark ups to determine contribution margins and breakeven points. Reviewed different strategic pricing methods (link back to Micro Econ on price customization, versioning and WTP etc). The problem set (Hohner) to be completed between blocks 3 and 4 covers this material. Watched some clips from “The price is right”.
Finally Steven gave some tips on preparing for the presentation;
· Don’t just focus on Product, cover all of the marketing mix
· Open with a bang (think vertical takeoff) to get everyone’s attention.
· Remember all communication is essentially persuasion.
· Think Shark tank!
· Decide on video or live presentation.
Finance
Ended the block with our final Finance class covering capital structures.
There is the MFL quiz to complete for next block and also the team case study – Efficient Asset Management. The final case (Ameritrade) is optional now.
Next block we will have one more class before the final exam in class on Saturday afternoon. Matteo has posted a cheat sheet and practice exam questions on B Courses.
Happy studying and finals prep.