15 July 2016
Finance - Fundamental tools and techniques
Are you wondering how financial markets work and how people make money in stock markets? Do you like to invest in stocks to try your luck? Do you like to know how to calculate payments for a mortgage, what interests do banks charge, or how long might it take for you to repay a car-loan? Are you planning to study Finance soon? Or did you study Finance already but things are not that clear yet? Are you interested to know the fundamentals of project appraisal, capital budgeting, or portfolio theory?
If answer to any of these questions is yes, then this is the course for you.
After completing the course you should become:
1. A mini-consultant for your family to make informed financial decisions on mortgages, car loans, investments etc.
2. Convinced that basic finance is not difficult to understand; and memorizing of ”apparently complicated-looking formula” is not necessary
3. Confident to study higher level finance comfortably
We will cover fundamental issues in Finance: basic tools & techniques necessary to making financial decisions. We will follow problem based learning (PBL) to make sessions interesting and enjoyable. We will emphasize on “learning by doing“ and work on various problems and exercises.
Day one: Fundamentals of Finance and Investment
1. What kind of business organization can I start?
2. What are the pros and cons of sole-proprietorship, partnership and private limited company, and corporations?
3. What are the main tasks of a Financial Manager in a firm?
4. How do stock markets work? How to read financial information in newspapers or online? How to invest money in stocks? How to open an online trading account?
Day two: Basic valuation techniques and their application
1. Why and how to consider time value of money in financial decisions?
2. How to develop complicated formulas without memorizing those?
3. How to use valuation techniques in personal situations of mortgage, car loans, pension or savings plans etc.? (Group work with practical problems)
Day three: Valuation of bonds, stocks, and investment projects
1. Determining the price of a bond
a. Price: how much should I be willing to pay for a bond?
b. How to calculate the yield-to-maturity (YTM) of a bond?
c. What is the impact of interest rate change on bond valuation?
2. Valuing shares/stocks
a. How to calculate the price of stocks using different methods?
3. Fundamentals of capital budgeting
a. How to evaluate investment projects using NPV and IRR?
b. How to rank investment projects?
(Group work with practical problems)
Day four: Risk, WACC, CAPM, and portfolio theory
1. What is risk in Finance and how to measure it?
2. How to measure cost of equity, cost of debt and weighted average cost of capital (WACC)?
3. What is Capital Asset Pricing Model (CAPM) and how to use it?
4. How to minimize risk by using portfolio theory
Day five: Financial Derivatives: Forwards, Futures, and Options
1. Pay-offs and simple investment strategies using options
2. Review of the lessons learned
3. Course evaluation
4. Exam (multiple choice questions)
Dr. Golam Robbani
EUR 400: Course fee