A simple and understandable summary of basic Corporate Finance theories and principles.
Financial markets
- A comprehensive overview of the two key financial instruments: Stocks and Bonds
- Understand how these instruments are issued, priced and traded
The risk-return trade-off and the pricing of...
Corporate finance final document
Monday, 19 December 2016 14:10
Financial markets
• Give an overview of the two key financial instruments: Stocks and Bonds
• Understand how these instruments are issued, priced and traded
The risk-return trade-off and the pricing of market risk
• Introduce the concepts of risk and return in financial markets and how
diversification influences risk and return
• Show how return is related to risk through the Capital Asset Pricing Model
Corporate finance
• Extend understanding on company valuation and investment appraisal
• Introduce the concept of the cost of capital and how it can be calculated.
• Understand how extreme events can affect the cost of capital
• Show how companies are financed and how to decide between different types of
finance.
Finance in practise
• Most lectures will include a discussion/case study to illustrate how the lecture
material is relevant to current financial trends and issues
Materials:
- Pre lecture materials
- Summary for each lecture
- Self study questions
- Case studies
• Lecture 1: Introduction to Finance (not examinable)
• Introduction to Finance, Financial Markets and Corporate Finance
,
,- Self study questions
- Case studies
• Lecture 1: Introduction to Finance (not examinable)
• Introduction to Finance, Financial Markets and Corporate Finance
Lecture 2: Bond Markets
Pricing bonds, Government & corporate bond markets, Green Bonds
Bond terminology:
- Bond indenture = legal contract stating terms of the bond
- Bond Covenants = additional requirements or conditions on the borrowing as
written in the indenture
- Face Value = Notional amount used to compute the interest payments
- Maturity date = Final repayment date
- Term = The time remaining until the repayment date
- Coupon Rate = Determines the amount of each coupon pay
- ment, expressed as an APR
- Coupon payment
○
- Yield to maturity (YTM) = the discount rate that sets the present value of
the promised bond payments equal to the current market price of the bond
○ The single discount rate that equates the present value of the bond
remaining cash flows to its current price
- Dirty price = bond price reffering to the price of a coupon bond that includes
the PV of all future cash flows, including interest accruing on the next
coupon payment.
- Clean price = Price of bond without accounting for accrued interest
Zero Coupon Bond
- No coupon payments
- If price < face value = sells at a discount. Called "pure discount bonds"
- T-bills are US govnerment zero-coupon bonds with a maturity of up to one
year. These Sovereign Bonds have no risk of default, and can be used for
risk free rate.
- Yield to maturity equals the rate of return, expressed as a function of the
price:
○
Coupon Bonds
- Sovereign Bonds
○ Coupon bonds pay face value at maturity with regular coupon interest
payments
○ Treasury Notes (Gilts in the UK) have coupon security with original
,
Voordelen van het kopen van samenvattingen bij Stuvia op een rij:
√ Verzekerd van kwaliteit door reviews
Stuvia-klanten hebben meer dan 700.000 samenvattingen beoordeeld. Zo weet je zeker dat je de beste documenten koopt!
Snel en makkelijk kopen
Je betaalt supersnel en eenmalig met iDeal, Bancontact of creditcard voor de samenvatting. Zonder lidmaatschap.
Focus op de essentie
Samenvattingen worden geschreven voor en door anderen. Daarom zijn de samenvattingen altijd betrouwbaar en actueel. Zo kom je snel tot de kern!
Veelgestelde vragen
Wat krijg ik als ik dit document koop?
Je krijgt een PDF, die direct beschikbaar is na je aankoop. Het gekochte document is altijd, overal en oneindig toegankelijk via je profiel.
Tevredenheidsgarantie: hoe werkt dat?
Onze tevredenheidsgarantie zorgt ervoor dat je altijd een studiedocument vindt dat goed bij je past. Je vult een formulier in en onze klantenservice regelt de rest.
Van wie koop ik deze samenvatting?
Stuvia is een marktplaats, je koop dit document dus niet van ons, maar van verkoper josefinerding. Stuvia faciliteert de betaling aan de verkoper.
Zit ik meteen vast aan een abonnement?
Nee, je koopt alleen deze samenvatting voor €5,83. Je zit daarna nergens aan vast.