F(t)# = exp ( Z T t f (t; u) du) satisfy dB(t; T ) = r(t) B(t; T ) dt (t; T )  cfw_z volatility of T maturity bond.
B(t; T ) dW(t): To implement HJM, you specify a function (t; T ); 0 t T : A simple choice we would like to
use is (t; T ) = f (t; T ) wh
(T ) dIP = S(0)IPSfS(T ) > Kg KB(0; T )IPT fS(T ) > Kg = S(0)IPSfF (T ) > Kg KB(0; T )IPT fF (T ) > Kg = S(0)IPS 1 F
(T ) < 1 K KB(0; T )IPT fF (T ) > Kg: 330 This is a completely general formula which permits computation as
soon as we specify F (t; T ).
(T ) and only for A 2 F(T ). IPT is called the T forward measure. Denominated in units of T maturity bond,
the value of the stock is F (t; T ) = S(t) B(t; T ) ; 0 t T : This is a martingale under IPT , and so has a
differential of the form dF (t; T ) =
(T ) dIP; 8A 2 F(T ): Denominated in shares of stock, the value of the T maturity bond is B(t; T ) S(t) = 1 F
(t) : This is a martingale under IPS , and so has a differential of the form d 1 F (t) = (t; T ) 1 F (t) dWS (t);
(2.1) where fWS (t); 0 t T g i
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
1
What is cost of capital
Components of Cost of Capital
Cost
Cost
Cost
Cost
of
of
of
of
Debt
Preferred Stock
Common Stock
New Issues of Common Stock
Weighted Average Cost o
indirect
income statement 2002
CFO
CFO
sales
cost of goods sold
gross profit
CFO
wages
depreciation
interest
total expenses
income from continuing operations
gain from sale of land
pretax income
taxes
net income
common dividends declared
CFO
CFI
CFO
CFI
b
tutorial Technica inc income statement
liquidity ratio
current ratio
current asset
current liabilities
138300
75000
1.84
quick ratio
current asset  inventory
current liabilities
138300
75000

82000
0.75
Activity ratio
inventory turnover
COGS
inventory
4
CHAPTER 3
Time Value of Money
Prepared by
Dr Fahmi Abdul Rahim
1
What is time value of money
The time value of money refers to the
observation that it is better to receive money
sooner than later.
Money that you have in hand today can be
invested to earn
DAH GUNA TUTORIAL CLASS
Balance Sheet as at December 31
Assets
Cash
Account Receivable
Inventories
Land and Buiilding
Gross Motor Vehicles and Equipment
less: Accumulated Depreciation
Net Motor Vehicles and Equipment
Total Assets
Liabilities
Account Payab
CHAPTER 3.1
TVM WITH FINANCIAL
CALCULATOR
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
CHAPTER 3.1
TVM WITH FINANCIAL
CALCULATOR
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
Futur
CHAPTER 2.2
RATIO ANALYSIS
1
PREPARED BY
DR FAHMI ABDUL RAHIM
UNIVERSITI TEKNOLOGI MARA
KAMPUS BANDARAYA MELAKA
RATIO ANALYSIS
2
Ratio analysis involves methods of calculating
and interpreting financial ratios to analyze
and monitor the firm's performance
Calculation NPV and IRR by
using Financial Calculator
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
Company
Required rate of return = 10%
Project A
Project B
42000
45000
Initial
Investment
Year
Operating cash flow
1
14
Bond Valuation with Financial
Calculator
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
1
Bond Valuation with Financial
Calculator
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
2
Bon
CHAPTER 6
EQUITY INVESTMENT
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
1
Lecture outline
What
is Common Stock
Advantages
of Stock Ownership
Disadvantage
of Stock Ownership
Characteristics
Common
of Common Stock
Stoc
CHAPTER 8
CAPITAL BUDGETING
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
1
Lecture Outline
What is capital budgeting
Basic terminology
Capital budgeting techniques
Breakeven cash inflow
Scenario analysis
Risk adjusted
1
Chapter 4
Risk and Return
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
2
Lecture outline
Definition risk and return
Calculation risk and return single asset
Calculation risk and return of portfolio
Types of risk
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
It comprised of three sections:
1. Cash flow from operating (CFO)
2. Cash flow from investing (CFI)
3. Cash flow from financing (CFF)
Format CF statement
CFO
+ CFI
+ CFF
Ch
Prepared by
Dr Fahmi bin Abdul Rahim
Faculty of Business Management
Universiti Teknologi MARA
Kampus Bandaraya Melaka
1
SCOPE
FINANCE
OF
MANAGERIAL
Learning Objectives:
Define finance
Describe managerial finance function
Identify key activities in finance
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
1
What is dupont system
The DuPont System is an approach that can be used to
analyze return on equity (ROE).
It uses basic algebra to breakdown ROE into a function of
dif
1
CHAPTER 2.0
TYPES OF FINANCIAL
STATEMENT AND OTHER
Prepared by
FINANCIAL
REPORTING
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
2
ANNUAL REPORT/ THE
STOCKHOLDERS REPORT
Every corporation has many and varied uses
for the standa
CHAPTER 9
CURRENT ASSETS AND
CURRENT LIABILITIES
MANAGEMENT
Prepared by: Dr Fahmi Abdul Rahim
Lecture outline (Part 1)
Working capital management
Net working capital
Cash Management
Inventory Management
Account Receivable Management
Working capital
manage
Prepared by
Dr Fahmi Abdul Rahim
Universiti Teknologi MARA
Kampus Bandaraya Melaka
Lecture Outline
Terminology
Motives for merging
Types of Merger
Terminology
Corporate Restructuring
The activities involving expansion or
contraction of a firm's operations
BreakEven Analysis
1) Breakeven analysis is the critical tool for determining the capacity a facility
must have to achieve profitability.
2) It is a means of finding the point in dollars and units at which costs equal
revenues. This point is the breake