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.
This course explores several key issues related to companies, investors, and the interaction between them in the capital markets. As an illustration of the questions we will raise (and hopefully answer) during the course, consider the following:
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.
The course consists of six sessions. Each session is self-contained, requiring no previous knowledge or preparation. Each session will consist of video lectures totaling 45-60 minutes, and will be complemented by one or two recommended readings (technical notes) that the instructor will refer to during each lecture and that will be made available alongside each video lecture.
Performance in the course will be evaluated on the basis of three quizzes, to be released after the second, fourth, and sixth sessions. These quizzes will ask you to apply the concepts and issues discussed and help you to assess your understanding of them.
Those participants who complete all three quizzes and earn an overall score of at least 60% will receive a Statement of Accomplishment.
Those participants who complete all three quizzes and earn an overall score of at least 85% will receive a Statement of Accomplishment with Distinction.
Yes. Students who successfully complete the class will receive a Statement of Accomplishment signed by the instructor.
In addition to the optional readings listed, all you need for this course is an Internet connection, interest in the subject and the time to
read, write, participate in the forums and complete the quizzes.
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