Corporate Finance Essentials

Corporate Finance Essentials will enable you to understand key financial issues related to companies, investors, and the interaction between them in the capital markets. By the end of this course you should be able to understand most of what you read in the financial press and use the essential financial vocabulary of companies and finance professionals.

• Course Overview
• Risk and Return
• Welcome to Session 1 In this session we will discuss some basic but essential financial concepts such as mean return, volatility, and beta. We will also learn how to apply them in order to assess the performance of selected equity markets over the last decade. The learning objective is to understand the basic, essential, and widely used financial concepts.
• Correlation and Diversification
• To understand diversification, an issue at the very heart of most investment decisions, and the role that correlation plays in determining the gains from diversification.
• The CAPM and the Cost of Capital
• In this session we will discuss how companies assess their cost of debt, their cost of equity, and ultimately their cost of capital. We will also discuss why this last concept is at the heart of many of the most important corporate decisions.
• Estimating the Cost of Capital - An Application
• In this session we will put to work all the concepts discussed in the previous session by estimating the cost of capital of a company. As usual, when putting theory into practice, a few complications arise and we will discuss how to deal with them.
• Project Evaluation
• In this session we will discuss how companies routinely decide whether or not to invest in projects. We will discuss the two tools most widely used for this purpose, NPV and IRR, and apply them to the evaluation of an investment opportunity.
• Corporate Value Creation
• In this session we will discuss EVA, a tool widely used to assess whether a company is creating or destroying value. We will also put this tool into practice by estimating the EVA of two companies.
• Final Quiz