Specific Objectives Chapter by Chapter
Specific Objectives Chapter by Chapter
Fundamentals of Corporate Finance Part 2
Chapter 1 – Time Value of Money
After completing this chapter, you will be able to:
• Calculate the Future Amount of a present amount given a specified rate and time period
• Calculate the Present Amount of a future amount given a specified rate and time period
• Calculate the Future Amount of an Annuity given a specified rate and time period
• Calculate the Present Amount of an Annuity given a specified rate and time period
• Recognize the four principle tables commonly used in discounting
Chapter 2 – Risk Return Concepts
After completing this chapter, you will be able to:
• Distinguish expected rates of return from a risk free rate of return
• Express risk using standard deviation
• Apply diversification to a portfolio of investments
• Apply Beta Coefficients for assessing risk with publicly traded companies
• Distinguish the relationship of risk as it relates to the Coefficient of Variation
• Recognize different risk premiums that investors may include in arriving at their rates of return
• Differentiate between Unsystematic Risk and Systematic Risk
Chapter 3 – Managing Risk with Derivatives
After completing this chapter, you will be able to:
• Apply the use Future Contracts in managing risk of price changes
• Differentiate Hedging from Speculation as it relates to risk management
• Recognize how Arbitrage is used in global markets
• Recognize how Options are used in buy and sell arrangements
• Identify different approaches used for valuing options
• Apply Interest Rate Swaps and Currency Swaps for reducing risks
Chapter 4 – Long Term Investing
After completing this chapter, you will be able to:
• Identify the three major activities associated with portfolio management
• Identify nine major steps for conducting a Cost Benefit Analysis
• Identify costs that should be excluded from your cost benefit analysis
• Formulate one or more approaches for estimating costs
• Interpret different types of benefits that you may want to include in your cost benefit analysis
• Devise a process by which you can risk adjust your cost estimate
• Interpret different risk adjusted values based on confidence intervals
• Identify three important economic indicators for evaluating long term investments
Chapter 5 – Capital Structure and Risk
After completing this chapter, you will be able to:
• Evaluate your capital structure in terms of minimizing your costs and how it impacts earnings
• Calculate your degree of operating leverage (DOL)
• Calculate your degree of financial leverage (DFL)
• Calculate breakeven sales volume and dollars
Chapter 6 – Optimal Capital Structure
After completing this chapter, you will be able to:
• Apply three ratios for measuring risks – Debt to Assets, Equity to Assets, and Debt to Equity
• Identify three important factors associated with calculating the Cost of Equity
• Apply the Hamada Equation in calculating the Cost of Equity
• Devise an appropriate approach for finding the Minimal Weighted Average Cost of Capital in relation to the market value of a company
Chapter 7 – Private Capital
After completing this chapter, you will be able to:
• Distinguish public capital markets from private capital markets
• Identify seven different channels for transferring private ownership
• Identify four levels of valuation by percentage of ownership
• Identify two important timing issues for cashing out of a private company
• Identify three sources of private equity
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