Corporate Finance Essentials will enable you to understand key financial issues related to companies, investors, and the interaction between them in the capital markets. By the end of this course you should be able to understand most of what you read in the financial press and use the essential financial vocabulary of companies and finance professionals.
1. Risk and Return
In this session we will discuss some basic but essential financial concepts such as mean return, volatility, and beta. We will also apply them to assess the performance of some equity markets over the last few years.
2. Diversification and Correlation
In this session we will discuss correlation, another essential financial tool, and its relationship to diversification, one of the bedrocks of modern finance. We will also apply them and assess the benefits of combining two specific equity markets into a portfolio.
3. The CAPM and the Cost of Capital
In this session we will discuss how companies assess their cost of debt, their cost of equity, and ultimately their cost of capital. We will also discuss why this last concept is at the heart of many of the most important corporate decisions.
4. Estimating the Cost of Capital – An Application
In this session we will put to work all the concepts discussed in the previous session by estimating the cost of capital of a company. As usual, when putting theory into practice a few complications arise and we will discuss how to deal with them.
5. Project Evaluation
In this session we will discuss how companies routinely decide whether or not to engage in investment opportunities. We will discuss the two tools most widely used for this purpose, NPV and IRR, and apply them to the evaluation of a specific project.
6. Corporate Value Creation
In this session we will discuss EVA, a tool widely used to assess whether a company is creating or destroying shareholder value. We will also put this tool into practice by estimating the EVA of two companies.