Introduction to Finance
Introduction to Finance will equip you with the analytical tools and financial acumen to make wise financial decisions. You will learn how financial markets function and understand how various entities like corporations, individual investors, banks, mutual funds, and the Federal Reserve interact and make decisions. By the end of this course, you will be able to value bonds, stocks, and corporate projects, you will know how to quantify investment risk, and you will learn how to create a well-diversified optimal investment portfolio.
- Explain the purpose of the financial system and the primary actors that participate in financial markets.
- Understand what corporations are and how they are governed.
- Describe the basic characteristics of stocks and bonds including how they are issued and how they are traded.
- Calculate the present value and future value of single cash flows, annuities, perpetuities, and more complex cash flows streams including combined and deferred annuities.
- Calculate loan payments.
- Learn how to value fixed-income securities such as zero-coupon and coupon bonds and learn how to calculate bond duration.
- Understand the term structure of interest rates and the yield curve.
- Value a share of stock by discounting future free cash flows as well as by using valuation multiples like the Price/Earnings and the Enterprise Value to EBITDA multiples.
- Calculate a project’s Net Present Value, Profitability Index and Internal Rate of Return.
- Learn how to measure investment risk and understand the distinction between systematic and idiosyncratic risk.
- Describe the importance of diversification from both an intuitive and a statistical perspective.
- Explain the relationship between the expected return of a risky security and its systematic risk using the Capital Asset Pricing Model.
- Calculate a firm’s cost of capital.
- Understand how basic derivative securities like Options and Futures work.