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Fin221 Final Revison 2slides

Fin221 Final Revison 2slides - Tairan Kevin Huang Jin Cui...

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6/7/2010 1 Tairan Kevin Huang & Jin Cui CCAD Group www.ccaduow.com Recap Mid Session Final Topics Aiming for Success
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6/7/2010 2 Lec1 Lec 2 Lec 3 Lec 4 The 3 Decision TimeValue of Money Bond Valuation RRR Type of Market PV,FV & Formulas Share Valuation Risk & Return Fisher Equation Cash Flows, Compounding & Discounting Expected Return for Individual and Portfolios Securities Ordinary Annuity, Annuity Due, Perpetuity, Growing Perpetuity CAPM Working Capital Management Decisions Affect current asset, current liability and current working capital (CA-CL) Capital Budgeting Decisions Determine what long-term productive assets the firm will purchase Financing Decisions Determine the firm’s capital structure. (ratio of Debt and Equity) The management’s objective is – Maximize Shareholder’s Value (Wealth) Which reflects on Share Prices
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6/7/2010 3 Primary Market Vs Secondary Market Money Market Vs Capital Market Public Market Vs Private Market Interest rate is the price for money Hence it decides the cost of financial decisions, and value of bonds and shares Real rate of interest Inflation-adjusted return earned by lender-savers Inflation-adjusted cost incurred by borrowers spenders Rarely observable as inflation > 0 Nominal rate of interest The rate that we actually observe in the marketplace at a given time Fisher Equation (1+Nominal) = (1+Real)*(1+ Inflation) i = r + Δ pe
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