Final+Review - Financial market history Two types of risk:...

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Final Review Notes Chapter 5 Project Cash Flow RWJ Chapter 10 (skip “setting bid price) Using NPV to make investment decisions—cash flow estimation a. Calculating cash flows of a project b. Incremental cash flows (base case versus alternative, sunk cost, side effects, opportunity cost) c. How to handle depreciation d. How to handle capital expenditure e. How to handle changes in working capital f. How to handle interest g. After-tax salvage value h. Continuing value i. How to handle inflation (remember depreciation is nominal) j. Putting everything together to estimate project cash flows and NPV Choosing between projects with different lives (EAC)
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Chapter 6 Risk and Return RWJ Chapter 12.1-4; 13.1-5 Definition of cost of capital
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Unformatted text preview: Financial market history Two types of risk: 1) general economic risk 2) industry and firm specific risk Risk measurement: standard deviation, variance Calculate expected return, variance, and standard deviation from probability distribution and historical data Risk and return for portfolios Diversification Portfolio expected return, variance and standard deviation Chapter 7 The CAPM RWJ Chapter 13.6-9 Economy-wide risk vs. firm specific risk Risk for a well-diversified portfolio Beta of a stock (zero beta, negative beta) CAPM SML Chapter 9 Cost of Capital RWJ Chapter 15.1-15.5 Cost of equity, debt, preferred stocks WACC Project beta Project beta vs. overall firm beta Divisional beta...
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This note was uploaded on 08/16/2011 for the course MGMT 109 taught by Professor Zheng during the Winter '11 term at UC Irvine.

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Final+Review - Financial market history Two types of risk:...

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