FNCE10002

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Introduction to Principles of Finance and Financial Math 1

- Investment Analysis & Corporate Finance

- Listed, publicly traded corporations

- The finance function

- Capital market efficiency

- Time value of money and interest rates

- Simple vs Compounded Interest

- Future value of a single cash flow

- Factors influencing PV and FV

- Valuing a series of cash flows

- PV of Series of CF

- FV of Series of CF

- Unknown interest rate and time period

Introduction to Financial Mathematics II

- Valuing perpetuities and annuities

- Valuing ordinary annuities and annuities due

- Deferred perpetuity and annuities

- Valuing growing cash flows

- Valuing growing OA

- PV of growing OA

- FV of growing OA

Valuation of Debt Securities

- Loan payments and Amortisation

- Effective Annual Interest Rate

- Matching cash flows with interest rates

- The valuation principle

- Characteristics of debt securities

- Pricing pure discount securities

- Pricing coupon paying bonds

- Calculating the Yield to maturity

- Relation between coupon rates to YTM

- Price sensitivity to interest rate changes

Valuation of Equity Securities

- Pricing of ordinary shares

- Largest equity markets by trading volumes

- The valuation principle

- Market quote and Market depth

- The general dividend discount model

- The constant dividend growth model

- Is all growth profitable

- The variable dividend growth model

- Pricing of preference shares

- Earnings, Dividends and Prices

- Pricing growth opportunities

- Information and stock prices

Modern Portfolio Theory and Asset Pricing I

- Risk and return of financial securities

- Does high risk = higher realised return

- The probability distribution approach

- Measures of risk and expected return

- Interpreting Return and risk measures

- Specifying investor preferences

- Portfolios and risk diversification

- Portfolio risk and return: two securities portfolio

- Covariance between security returns

- Correlation between security returns

- Risk-return Tradeoff: Two securities

- Portfolio risk and return: leveraging

- Portfolio risk and return: short selling

Modern Portfolio Theory and Asset Pricing II

- Limits to diversification benefits

- The Capital Asset Pricing Model

- CAPM's main assumptions

- Risk return frontier with many securities

- Investor choice with risk free security

- The market portfolio and its proxies

- The CAPM Intuition

- Systematic risk and the CAPM

- Systematic risk and correlations

- The security market line

- Estimating and interpreting beta

- Interpreting and using beta

- Estimating other CAPM parameters

- Applying the CAPM

- The CAPM and portfolio evaluation

- The CAPM and security selection

Capital Budgeting I

- Methods of project evaluation

- The NPV method

- NPV and firm's share price

- The IRR method

- Problems with the IRR

- Comparing IRR and NPV

- Problems with incremental IRR

- Analysing projects with resource constraints

- Payback Period

- Problems with payback period

Capital Budgeting II

- Issues in cashflow estimation

- Inflation and capital budgeting

- Project with different lives

- The WACC

- Estimating and using WACC

- Valuing the financial components

- Estimating the cost of financing components

- Estimating the Cost of capital

- Taxes and the Cost of capital

- Using the cost of capital

- Limitations of the cost of capital

Capital Structure and Payout policy

- Financial leverage

- Effects of financial leverage

- Modigliani and Miller Analysis

- Modigliani and Miller Proposition 1

- MM and No arbitrage

- MM and arbitrage

- MM and Capital structure changes

- MM and proposition 2

- MM and corporate taxes

Capital Structure and Payout Policy II

- MM with taxes and the real world

- Other market imperfections

- Bankruptcy and capital structure

- Agency costs of capital structure

- Optimal capital structure

- Payout policies

- Institutional features of dividends

- Dividend payout policies

- Dividend vs Share repurchases

- MM and the dividend Irrelevance Theory

- Average dividend Payout ratios

- Trends in dividends and profits

- When dividend policy matters

- Dividend policy in a classical tax system

- Dividend policy in an imputation tax system

- Dividend policy and non tax explanations

- Does dividend policy matter

An Introduction to Options

- Overview of derivatives markets

- Hedging with forwards and Future

- Overview of options markets

- The Australian options market

- Call and Put options

- Payoff and Profit on call options

- Moneyness of call options

- Payoff and profit on long call options

- Payoff and profit on short call option

- Payoff and profit on put options

- Moneyness of put options

- Payoff and profit on long put option

- Payoff and profit on short put option

- summary of profits and option contracts

- trading strategies

- Hedging with call options

- Hedging with put options

- Put call purity and synthetic positions

- Factors affecting option prices

- Intrinsic and time value of call options

- Factors affection call&put option prices

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