Summary
Summary Fundamentals of Corporate Finance ISE - Banking & Finance
- Course
- Institution
- Book
This is a summary of the course 'Banking & Finance' IBM 1
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Samenvatting Fundamentals of Corporate Finance ISE - Banking & Finance
Seller
Follow
sarahabdelmawgoud
Reviews received
Content preview
kristof.moens@arteveldehs.beBanking & Finance
Contents
Banking & Finance...........................................................................................1
CHAPTER 1: Goals and Governance of the Corporation................................2
1.1 Investment and financing decisions.....................................................2
1.2. What is a corporation?........................................................................5
1.3. Who is the Financial Manager?...........................................................6
1.4. Goals of the Corporation.....................................................................7
1.6. The ethnics of maximising value.........................................................8
CHAPTER 2: Financial markets and institutions............................................9
2.1. The importance of financial markets and institutions.........................9
2.2. The flow of savings to corporations....................................................9
2.4. The crisis of 2007 – 2009..................................................................11
Chapter 5: The Time Value of Money.........................................................12
5.1. Future values and compound interest..............................................12
5.2. Present values..................................................................................13
5.3. Multiple cash flow.............................................................................14
5.5. Level cash flows: perpetuities and annuities....................................15
5.7. Effective annual interest rates..........................................................18
5.8. Inflation and the time value of money..............................................18
CHAPTER 6: VALUING BONDS.....................................................................19
6.1 Bond pricing.......................................................................................19
6.2 Interest rates and bond prices...........................................................21
6.6 Corporate bonds and the risk of default.............................................21
CHAPTER 7: VALUING STOCKS....................................................................22
7.1 Stocks and the stock market..............................................................22
,kristof.moens@arteveldehs.be
7.2 Market values, book values and liquidation values............................23
7.3 Valuing common stocks.....................................................................24
7.4 Simplified dividend discount model...................................................25
CHAPTER 14: CORPORATE FINANCE............................................................26
14.2 Patterns of corporate finance...........................................................26
14.3 Common stock.................................................................................27
14.4 Preferred stock.................................................................................30
CHAPTER 15: VENTURE CAPITALS AND IPO’S..............................................31
15.1 Venture Capital (VC)........................................................................31
15.2 The initial public offering (IPO).........................................................34
CHAPTER 22: INTERNATIONAL FINANCIAL MANAGEMENT...........................39
22.1 Foreign Exchange Markets...............................................................39
H = R – E -> Happiness equals reality minus expectations
CHAPTER 1: Goals and Governance of the Corporation
1.1 Investment and financing decisions
FEDEX Case:
CASH OUT: how the money is spent
o Expansion across USA / expanding stores
o Delivery vans / airplanes
o Overnight delivery
o Fuel -> not really an investment = expenditures
o Staff (salaries + benefits) -> not really an investment =
expenditures
CASH IN: how the money is raised
o 4-million-dollar inheritance
o External investors
o Gambling the last 5000 dollars -> 32000 dollars
o PROFIT!
o Going public in the stock market (IBO)
Venture Capitalist: investor who is willing to give you money on the early
days, when you do not have any money yet, taking a risk in you.
,kristof.moens@arteveldehs.be
Dividends: a sum of money paid regularly (typically annually) by a company
to its shareholders out of its profits (or reserves)
Expenditures: the action of spending funds
CASH OUT:
Where did the cash go to?
Which investments have been made by FEDEX over the years?
CASH IN:
Where did the cash come from?
How did FEDEX finance its investments?
MICROSOFT case:
- Which investment is being considered? Building datacentre capacity
for AI and Cloud
- Is it tangible or intangible? It is tangible
- Does it have long-term consequences or a short-term pay-off? Long-
term investment but short-term payoff
- Is it a rather big or relatively small investment? It is a big investment
- Do you think it is or will be a success story or… possibly a complete
disaster? Success story, we’re seeing how many people are using AI
and Cloud
JOHNSON & JOHNSON case:
- Which investment is being considered? Research and Development
programs
- Is it tangible or intangible? Intangible
- Does it have long-term consequences or a short-term pay-off? Long-
term consequences , for the drug to get developed and approved
- Is it a rather big or relatively small investment? Big investment
- Do you think it is or will be a success story or… possibly a complete
disaster? We don’t know
DELHAIZE case:
- Which investment is being considered? E-commerce and home
delivery and more production (main one)
- Is it tangible or intangible? Tangible (products)
- Does it have long-term consequences or a short-term pay-off? Both
, kristof.moens@arteveldehs.be
- Is it a rather big or relatively small investment? Small
- Do you think it is or will be a success story or… possibly a complete
disaster? Success story, mainly for people that don’t have the time to
go to the shops + breaking records
INVESTMENT DECISIONS:
- Capital expenditures (CAPEX) or capital budgeting decisions => SPEND
money
- Purchase of real assets = assets used to produce goods and services
- Tangible or intangible
- Long-term consequences or short-term pay off
- Billions USD/EUR or relatively small
- Success story or a complete disaster
Real assets that add a lot of value to the company
PORSCHE case:
- Is this financing via equity or debt? Equity
- Will the investor become (co-)owner of the company or not? Co-owner
of the company (if you buy a share of something, then you are a co-
owner)
- Is it long or short term financing? Long-term financing
- Will the investor receive interest or dividend payments as a return?
Dividends
SAUDI ARABIA case:
- Is this financing via equity or debt? Debt (Public Investment Fund), it is
a loan
- Will the investor become (co-)owner of the company or not? No
- Is it long or short term financing? Long-term financing (everything
longer than a year is long-term, everything shorter than a year is
short-term)
- Will the investor receive interest or dividend payments as a return?
Interest
Equity: the value of the shares issued by a company / the quality of being
fair and impartial.
Initial public offering (IPO): when a private company first sells shares of stock
to the public
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller sarahabdelmawgoud. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $9.95. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
64438 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now