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M1C4 - Fundamentals of Corporate Finance Part 2
Course Number
M1C4
Price
$35.00
Overview
This course continues from Course 3 on corporate financial management, covering the topics of discounting, risk-return, the use of derivatives, capital investment analysis, the use of leverage and concepts associated with private capital. Once you complete both courses, this course and the previous course, you should have a good overall understanding of how corporate finance works. The course includes a supplemental workbook showing six important examples: 1) Examples of Calculating the Time Value of Money, 2) Measuring Risk and Returns, 3) Examples of Calculating Option Prices, 4) Example of a Cost Benefit Analysis, 5) Examples of Operating Leverage, Financial Leverage, and Breakeven Analysis, and 6) Example of Evaluating the Optimal Capital Mix.

The course is designed for anyone seeking a good overall understanding of business finance. In order to cover the full range of topics, participants should take the previous course: Fundamentals of Corporate Finance Part 1. Participants should also consider taking the first two courses of this module: Basics of Accounting and Introduction to Financial Analysis. By completing all five courses of the module, including Risk Management, you will have a solid working knowledge of business finance.   
Objective
Provide participants with an overall understanding of corporate finance as it relates to the time value of money and discounting, measuring risk and return, the concept of diversification, the use of derivatives to manage risk, analyzing investments using a Cost Benefit Analysis, how to properly use leverage, and how to determine the optimal capital mix.  Specific objectives chapter by chapter are described below:

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
Additional Information

Course content is organized similar to a condensed textbook on the topic. Course length is approximately 50 pages. The text content is supplemented with several features such as linked examples, mouse-over explanation boxes, and audio / video files. The course also includes a Study Workbook to help ensure that all course content is fully understood. Course chapters include:

Chapter 1 – Time Value of Money: Future Value, Present Value, formulas, tables and examples.

Chapter 2 – Risk Return Concepts: Measuring Risk, Risk Returns, Diversification, and Risk Premiums

Chapter 3 – Managing Risk with Derivatives: Hedging, Future Contracts, Interest Rate Swaps, and Options.

Chapter 4 – Capital Investments: Portfolio Management, Cost Benefit Analysis, Estimating Costs, Quantifying Benefits, and Risk Adjusting Values.

Chapter 5 – Capital Structure and Risk: Operating Leverage, Financial Leverage and Breakeven Analysis.

Chapter 6 – Optimal Capital Structure: Cost of Capital, Minimal WACC, and Assessing Market Values.

Chapter 7 – Private Capital: Distinguishing Private vs. Public, Transfer Channels, Transfer Methods, and Equity Sources.