FIN 301
Syllabus
Lecturer
Egor Matveyev
Office: BUS 2-32B
Office hours
Tuesday, 2:15-3:15pm
Thursday, 2:15-3:15pm
By appointment
[email protected]
Subject line: Egor or Matveyev
2
About Me
Joint Alberta Business School in 2012
PhD from Universi
Homework #1: Time Value of Money
FIN 301, Winter 2017
Due by 4pm on January 27
Problem 1
Suppose you want to buy a house for $620,000 and you have $80,000 in savings you can use as a down payment. The
rest you finance with a 5-year mortgage (monthly payme
Homework #5: Risk and Return & Options
FIN 301, Winter 2017
Due by 4pm on March 31
Problem 1
Consider the following information about three stocks:
State of Economy
Boom
Average
Poor
Recession
Rate of Return if State Occurs
Stock A
Stock B
Stock C
Probabi
Final exam review
April 11, 2017
1:03 PM
Final exam review
Final Exam Page 1
Final Exam Page 2
Final Exam Page 3
Final Exam Page 4
Final Exam Page 5
Final Exam Page 6
Final Exam Page 7
Final Exam Page 8
Final Exam Page 9
Final Exam Page 10
Lec 7, Risk and return
February 28, 2017
2:33 PM
Lec 7, Risk and return
Risk and Return Page 1
Risk and Return Page 2
Risk and Return Page 3
Risk and Return Page 4
Risk and Return Page 5
Risk and Return Page 6
Risk and Return Page 7
Risk and Return Page 8
Lec 10, Capital structure
March 30, 2017
3:52 PM
Lec 10, Capital structure
Capital Structure Page 1
Capital Structure Page 2
Capital Structure Page 3
Capital Structure Page 4
Capital Structure Page 5
Capital Structure Page 6
Capital Structure Page 7
Capit
Seminar
February 28, 2017
2:34 PM
Seminar 7, Risk and Return, FIN 301
Risk and Return Page 1
Risk and Return Page 2
Risk and Return Page 3
Risk and Return Page 4
Risk and Return Page 5
Risk and Return Page 6
Risk and Return Page 7
Risk and Return Page 8
R
Lecture 2, Time value of money
February 10, 2017
5:48 PM
Lec 2, Time value of money
Time Value of Money Page 1
Time Value of Money Page 2
The value of compound interest as you
look at the graph is that its essentially
an exponential function, meaning that
Lec 11, Market efficiency and Raising capital
April 4, 2017
10:55 PM
Market Efficiency and Raising Capital Page 1
Market Efficiency and Raising Capital Page 2
Market Efficiency and Raising Capital Page 3
Market Efficiency and Raising Capital Page 4
Market
Assignment 2
Investment Principles
Each group should submit the assignment to me electronically (at [email protected]). In the
subject of the email, please put the class number and Assignment 2 submission. In the body,
please include the names and CC
Assignment 1
Investment Principles
Please submit your assignment to me either electronically or in hard copy. If understanding
your work requires me to understand spreadsheet formulas, you must submit electronically.
Your (super) discount retail sto
FIN 502
Risk and Return
Investor Decision and Uncertainty
Consider three possible lottery tickets with the following
payoffs in 1 year:
Price=E[payoff]/(1+r), where r is the RRR on this ticket
What is the expected payoff of each ticket?
2
Investor Deci
FIN 502
Project Valuation
Valuation Model
T
CFt
P0
t
t 0 (1 RRR )
We need cash flow estimates!
Project types:
Cost Saving (replacement decisions)
Revenue Expansion (new assets)
Both should increase cash flow
2
Considerations
Earnings
Earnings: acc
FIN 502
Bond Valuation
Debt
Debt: contract explicitly specifies
What cash flows will be received
When they will be received
Interest payments are
Tax deductible by the firm
Fully taxable by the recipient
Debt holders have priority claim on a
firms
FIN 502
Time Value of Money
Investing for a Single Period
r interest rate (nominal)
P0 $ to be invested today
P1 $ available next period from
investment
P1 P0 P0 r P0 (1 r )
P1
P0
(1 r )
2
Investing for Multiple Periods
Calculating
Future Value:
P1
FIN 502
Equity Valuation
Stock vs. Bonds
Annual realized returns on indices:
2
Stock vs. Bonds
3
Valuing Equity
Book value of equity
Book value of equity = Assets Liabilities
Backward looking, reflects historical values
Liquidation value of equity
L
FIN 502
Investment Decisions
What Should a Good Criterion Do?
A good evaluation method should
Consider all cash flows
Account for timing differences
Provide unambiguous decision rule
Measure wealth created for shareholders
Some criteria that dont
Payba
FIN 502
Syllabus
About
Lukas Roth
Office hours
On teaching days
By email or phone
780-492-4431
[email protected]
2
Course Website
3
Required Material
Textbook
Corporate Finance, 3rd Canadian Edition;
Berk, DeMarzo and Stangeland, 2014,
Pearso
FIN 502
Market Efficiency
Market Efficiency
Fundamental Questions:
What information is reflected in stock prices?
What does the prior history of the stock tell us
about future stock price?
How quickly do prices react to news?
Can an investor without
FIN 502
Options
Options, Options Everywhere
All risky investments have embedded
options
Managers have the option to:
Cut back or abandon investments that
go sour
Expand investments that turn out well
2
Options and Volatility (i.e. Risk)
The more vola
FIN 502
Real Options
Capital Budgeting with DCF
Using NPV rule in capital budgeting
Forecast projects expected future cash
flows
Discount cash flows at discount rate
reflecting
Time value of money
Riskiness of the cash flows
Add up discounted cash f
Question
1 [5]
2 [13]
3 [9]
Mark
Question
4 [8]
5 [5]
TOTAL out of 40
Mark
1. Aria Stork has $60,000 this year. She faces the investment opportunities in productive (aka real/non-financial) assets
represented by the curve in the following figure (the figu
1. (a) The coordinates of point C are ( x1 , y1 ) (76250,0) . The coordinates of point D are
( x2 , y2 ) (0,91500) .
The slope of the straight line in the graph =
(1 r )
y2 y1 91,500 0
1.2000
x2 x1 0 76, 250
Therefore, the market interest rate, r, is eq
Date
AAPL
ADM
BA
C
CAT
DE
HSY
MSI
PG
SIRI
WMT
YHOO
Adj Close Adj Close Adj Close Adj Close Adj Close Adj Close Adj Close Adj Close Adj Close Adj Close Adj Close Adj Close
Dec-16
115.82 45.650002 55.67999 59.260353 91.97683
103.04
103.43 82.889999 83.41888