Finance 101 – Introduction to Finance
Jim Riggio reviewed Finance 101 with his daughter, Gabriella, who is a Sophmore at Boston University, Questrom School of Business.
1-Corporate Finance & the Financial Manager
Chapter 1: Corporate Finance & the Financial Manager: – Why Study Finance? – The Four Types of Firms – The Financial Manager – The Financial Manager’s Place in the Corporation – The Stock Market – Financial Institutions
2-Financial Statement Analysis
- Know why the disclosure of financial information through financial statements is critical to investors
- Understand the function of the balance sheet
- Assets
- Liabilities
- Shareholders Equity (and Market Capitalization)
- Understand how the income statement is used
- Net Income
- Earnings per Share
- Understand the main purpose and aspects of the Sarbanes-Oxley (SOX) reforms following Enron and other financial scandals
3-Time Value of Money
- Time Value of Money
- Cost-Benefit Analysis
- Market Price (one) and Value Principle
- Interest Rate
- Interest Rate Factor
- Discount Rate
- Discount Rate Factor
- Valuing Cash Flow Rules:
- Comparing and Combining Values (at same time)
- Compounding (Present -> Future)
- Discounting (Future -> Present)
3-Time Value of Money Excel Supplement Work Session
4-Time Value of Money: Valuing Cash Flow (1 of 2)
- Value a series of many cash flows
- Value a perpetual series of regular cash flows called a perpetuity
- Value a common set of regular cash flows called an annuity
- Value both perpetuities and annuities when the cash flows grow at a constant rate
- Compute the number of periods, cash flow, or rate of return on a loan or investment
4-Time Value of Money: Valuing Cash Flow (2 of 2)
4-Time Value of Money Excel Supplement Work Session
5-Interest Rates
- Understand the different ways interest rates are quoted
- Use quoted rates to calculate loan payments and balances
- Know how inflation, expectations, and risk combine to determine interest rates
- See the link between interest rates in the market and a firm’s opportunity cost of capital
6-Bonds (1 of 2)
- Understand bond terminology
- Compute the price and yield to maturity of a zero-coupon bond
- Compute the price and yield to maturity of a coupon bond
- Analyze why bond prices change over time
- Know how credit risk affects the expected return from holding a corporate bond
6-Bonds (2 of 2)
- Understand bond terminology
- Compute the price and yield to maturity of a zero-coupon bond
- Compute the price and yield to maturity of a coupon bond
- Analyze why bond prices change over time
- Know how credit risk affects the expected return from holding a corporate bond
7-Stocks
- Describe the basics of common stock, preferred stock, and stock quotes
- Compare how trades are executed on the NYSE and NASDAQ
- Value a stock as the present value of its expected future dividend
- Understand the tradeoff between dividends and growth in stock valuation
- Appreciate the limitations of valuing a stock based on expected dividends
- Value a stock as the present value of the company’s total payout