MONASH
BUSINES
S
SCHOOL
Week 8: Risk and Return I
Reading: Chapter 7
Thanh Huynh
Learning objectives
Know how to calculate realized returns, holding
period returns, average returns, and standard
deviation (volatility).
Explain the tradeoff between risk
MONASH
BUSINES
S
SCHOOL
Week 5: Project Evaluation
II
Readings: Chapter 11
Thanh Huynh
Learning Objectives
Explain principles used in estimating project cash
flows.
Understand the impact of taxes on project
evaluation.
Evaluate mutually exclusive proje
MONASH
BUSINES
S
SCHOOL
Week 1: Introduction and
Financial Mathematics
Readings:
Unit Guide
Chapter 1 and Chapter 5
Thanh Huynh
What is Corporate Finance?
To study how a manager makes decision
to maximize the firms value
What investments should the firm
MONASH
BUSINES
S
SCHOOL
Week 4: Project Valuation I
Readings: Chapter 10
Thanh Huynh
Learning Objectives
Evaluate projects using the Net Present Value
method.
Understand the following alternative methods of
project evaluation, their advantages and
disad
MONASH
BUSINES
S
SCHOOL
Week 3: Valuation of
Bonds and Equities
Readings: Chapters 8 and
9
Thanh Huynh
Learning Objectives
Use the tools of financial mathematics to
value debt securities (e.g. bonds, debentures) and
equities.
Explain bond concepts and u
MONASH
BUSINES
S
SCHOOL
Week 6: Project Evaluation
III
Readings: Chapter 12
Thanh Huynh
Learning Objectives
Understand the association between variable costs,
fixed costs and project risk.
Analyse project risk using sensitivity and breakeven
analyses.
BFC2140 Week 3 Valuation of Bonds and Equities (ch.8
& 9)
Valuing a financial asset

Value of financial asset = PV of expected future cash flows

Information required for valuation
Expected future cash flows
Shares dividends
Bonds coupon payments and pr
BFC2140 Week 4 Project Evaluation (ch. 11)
Capital Budgeting Process

Capital Budgeting (Investment):
Cash outlay(s) now in the exception of benefits (net cash inflows) later

Most of the information needed is generated internally,
Beginning with the sa
BFC2140 Week 6 Working Capital Management (ch.
14)
Working capital basics

Working capital management involves two key issues
1. What is the appropriate amount and mix of current assets for the
company to hold?
2. How should these current assets be finan
BFC2140 Week 10 Cost of Capital (ch. 13)
Risk, Return and the COC

The return demanded by investors is effectively a cost (cost of capital). It is an
opportunity cost as capital suppliers will require that a project produce a rate of
return at least as g
BFC2140 Week 7 Risk and Return 1 (ch. 7)
What is return?


Return is a measure of value increase on an investment, usually expressed
as a percentage
Return can be measured over any interval of time, but common to use one
year or the investments horizon
BFC2140 Week 1 Investors, Firms & Markets (ch.1)
What is corporate finance?

The management of a business finances (Financial Management)
The management of the relationship of a firm with external financial
markets.
Its all about the cash flows

A firm
BFC2140 Week 10 Cost of Capital (ch. 13)
Risk, Return and the COC


The return demanded by investors is effectively a cost (cost of capital). It
is an opportunity cost as capital suppliers will require that a project
produce a rate of return at least as
BFC2140 Week 5 Project Evaluation with Risk (ch. 12)
Variable Costs, fixed costs and project risk
Variable costs (VC): costs that vary directly with the number of units sold
Fixed costs (FC): Costs that do not vary with unit sales in the short run
Project
BFC2140 Week 2 Financial Mathematics (ch.5 & 6)
Fundamental concepts

Cash flows: The funds that flow between parties either now or in the
future as a consequence of a financial contract
Rate of return: Relates cash inflows to cash outflows

Interest ra
BFC2240 Equities and
Investment Analysis
Lecture 3 Portfolio Theory
Topic Overview
Do not put all your eggs in one basket.
Investor preferences & Expected utility
Portfolio return and risk
Portfolio diversification
MeanVariance opportunity set
Inclu
Final Examination Advice for BFC2140 students
Last updated: Sunday, 30 July 2017
The final examination consists of 6 questions, in total 100 marks. Around 70% are
calculations and the remaining are short answer questions. Students must attempt all
questio
BFC3170 Main Exam
Structure
6 question worth 60%
Write your answers in the question booklet.
5 of the questions contain at least some part as calculation questions.
You need to bring your approved for use calculator.
Questions cover both lecture and tutor
Topic 1: Why are FIs Special?
Overview of the Australian financial system and banking system
The role of the financial system: Facilitate financial transactions through the creation, sale
and transfer of financial assets
Components:
Financial Institutions
WEEK 5 BFC3170 TUTORIAL QUESTIONS
Chapter 5
3. What is the repricing gap? In using this model to evaluate interest rate
risk, what is meant by rate sensitivity? On what financial performance
variable does the repricing model focus? Explain.
Repricing gap
BFC3170
Management of financial intermediaries
Topics 1 12 Notes
Topic 1
Why are financial institutions special? The financial services industry: depository
institutions
Focus Areas:
1. How do banks differ from other financial institutions (FIs)?
2. How d
BFC Week 11 tutorial
Question 1
How do loan portfolio risks differ from individual loan risks?
Loan portfolio risk refers to the risks of a portfolio of loans as opposed to the
risks of a single loan
Inherent in the distinction is the elimination of som
1
CHAPTER 18
Business Formation, Growth, and Valuation
Learning Objectives
1.
Explain why the choice of organizational form is important, and describe two
financial considerations that are especially important in starting a business.
2.
Describe the key c
1
Chapter 6
Discounted Cash Flows and Valuation
Learning Objectives
1. Explain why cash flows occurring at different times must be discounted to a
common date before they can be compared, and be able to compute the present
value and future value for multi
information in the problem statement in Problem 13.36? Assume that the average and marginal
tax rates for Coral Gables are both 25 percent.
The Balanced, Inc., has three different product lines of business. Its least risky product line has a
beta of 1.7,
Payout policy
Future value: Your bank pays 5 percent interest semiannually on your savings account. You
dont expect the current balance of $2,700 to change over the next four years. How much
money can you expect to have at the end of this period?
Multiple
Cost of common stock: TwoStage Rocket paid an annual dividend of $1.25 yesterday, and it is
commonly known that the firms management expects to increase its dividends by 8 percent for
the next two years and by 2 percent thereafter. If the current price o