Ch 6 Bonds Part I

Ch 6 Bonds Part I - FINA 111 Spring 2010 Part I Professor...

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1 FINA 111 – Spring 2010 Part I Professor Lynn Pi Office: Room 2456 (lifts 25-26) Email: lynnpi@ust.hk Part II Professor V S Somanath Office: Room 2391 (lifts 17-18) Email: somanath@ust.hk
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2 Teaching Assistants Ms. Stella Lien fnstella@ust.hk Mr. Benson Leung bbsleung@ust.hk Mr. Le Li fnlile@ust.hk Office: 3392 (lifts 17-18) Phone:2358 7674 Office hours: Fri 10:00 – 12:00 and by appointment
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3 Prof Lynn Pi - Course Plan Financial Management Foundation and Tools Valuation Short-term Financial Management Risk and Return Long-term Financing Decisions Financial Statement Analysis Capital Budgeting Working Capital Management Cost of Capital Capital Structure Valuation Principle Time Value of Money Bonds and Stocks Payout Policy Investment Decision Rules
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4 Objective of Financial Management Maximize Value of Firm (Maximize PPS) Welfare of Stakeholders Financial Policies Maximize wealth of investors
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5 Financial Policies Short term Assets: Working Capital policy Ch 18 Financing policy: Cost of capital Ch 12 Capital Structure Ch 15 Payout policy Ch 16 Long term Assets: Capital Investment policy Ch 7,8 Maximize Value of firm
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6 Firm Valuation Firm Valuation Measuring and Pricing Risk Ch 10,11 Asset Valuation Ch 4,7,8,18 Financing Policies: Cost of Capital Ch 12 Capital Structure Ch 15 Payout Policy Ch 16 Securities Valuation: Bonds Ch 6 Stocks Ch 9 External Factors
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7 FINA 111 – Part II Part II will: 1. Consider the valuation of bonds and stocks , long-term financial instruments issued by the firm for financing its activities (Ch 6, 9) 2 . Address the risk-return framework of and pricing of risky investments (bonds and stocks): Risk-return tradeoff (Ch 10) Risk diversification (reduction) (Ch 11) Risk pricing (Ch 11)
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8 FINA 111 – Part II 3. Continue with financial policies (capital budgeting and working capital policies discussed in Part I) Discuss financing policy: Cost of capital of funds used by the firm (Ch 12) The choice of debt versus equity in financing and optimal capital structure for the firm (optimal debt-equity mix) (Ch 15) The level and form of payout to investors (dividends, share repurchases, stock dividend) (Ch 16)
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9 Corporate Finance and Investment Management Assets: Long-term Assets (Ch 7,8) Short-term Assets (Ch 18) Sales Profit Financing (funding) External sources: Long-term: Loans, Bonds, Stock (Ch 6,9) Short-term: Loans, Notes Internal source : Retained Earnings Cost of capital (Ch 12) Capital structure (Ch 15) Payout policy (Ch 16) External suppliers of funds: Banks – Loans Investors – Notes, Bonds, Stock Managing investments (Ch 10, 11)
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10 FINA 111 – Part II FINA 111 Part II Valuation of Securities Measuring and Pricing Risk Financing Policy Bonds Ch 6 Stocks Ch 9 Risk-Return Tradeoff Ch 10 Risk Diversification and Risk Pricing Ch 11 Cost of Capital Ch 12 Debt Policy Ch 15 Payout Policy Ch 16
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11 Chapter 6 Bonds – Part I
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12 http://www.nytimes.com/aponline/2010/03/15/us/politics/AP-US-Foreign-Holdings.html?_r=1&scp=17&sq=China%20bonds&st=cse March 15, 2010 Click here
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13 http://www.marketwatch.com/story/china-issues-its-first-50-year-sovereign-bond-2009-11-27 Nov 27, 2009 Click here
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This note was uploaded on 08/10/2011 for the course FINA 101 taught by Professor X during the Spring '11 term at HKUST.

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Ch 6 Bonds Part I - FINA 111 Spring 2010 Part I Professor...

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