BUS243: Chinese Business
Chinas Financial System
1. A sound financial system is vital for a modern market economy:
Its functions include:
(a) Providing payment for services it is inconvenient, inefficient and risky to
carry hard cash for paymen
Interest Rate Risk
Interest Rate Risk and
This topic will consider the risk associated with investing
in bonds which results from changes in interest rates. It
will also address interest rate risk management.
Initially we will review the impact
Portfolio theory & asset pricing
Explain the concept of efficient portfolios
Explain the relation between market risk, or
beta, and return
Compare beta and standard deviation as
measures of risk
Explain the relation between risk a
Review valuation concepts
Valuation of debt and equity
Understand the difference between intrinsic value
and market value
Valuation of debt & equity securities using TVM
Understand the nature of interest rate risk
Dividend Policy Decisions
Objectives Dividend Policy
Explain why dividend policy is irrelevant to
shareholders wealth in a perfect capital market
with no taxes.
Identify the factors that may cause dividend
policy to be important.
Be familiar wi
Capital Budgeting and Cash Flow
Be able to identify and calculate relevant project
how to treat inflation
understand the effect of tax on CFs
Appl 1- Label Maker cash flows & NPV
The machine will cost $2500 & has
Risk and Return
Define & measure risk and return
Understand the concept of risk-aversion
Explain how diversification reduces risk.
Covariance & correlation
Explain the distinction between systematic
(non-diversifiable) and non-sy
Capital Budgeting - Project
Be able to apply main methods of project
Recognize advantages / disadvantages of main
project evaluation methods.
Understand why net present value is preferred to
all other m
The capital market
Understand the functions of a capital market.
Distinguish between financial agency institutions,
financial intermediaries and investing institutions.
Identify and explain the role of financial agency