Finance: Fundamental Tools and Techniques
NOTE: If you have not followed Financial Accounting before, we highly recommend that you also enroll in the course “Financial Statements: How to Prepare and How to Analyze” offered in this summer school (10 -14 July)
Following high appreciations from participations in 2014, 2015, and 2016 (at Maastricht) we are happy to offer this course again in 2017 at The Hague.
- Are you planning to study Business Studies or Finance soon? Or did you study Finance before but things are not that clear yet?
- Are you wondering how to calculate installments for a mortgage or a car loan?
- Do you like to know what interests banks charge or how long might take it to repay a car loan?
- Are you wondering how people know what should be the price of a bond or a stock?
- Do you like to invest in stocks to try your luck?
- Are you interested to know the fundamentals of project appraisal or capital budgeting?
If the answer to any of these questions is yes, then this is the course for you. Register now to reserve your place before it is full. Remember: last year this course was oversubscribed!
Expected achievements: After completing the module you should become:
- A mini-consultant for your family to make informed financial decisions on mortgages, car loans, investments etc.
- Convinced that basic finance is not that difficult to understand. And memorizing of complicated-looking formula is not necessary
- Confident to study higher level finance comfortably
We will cover fundamental issues in Finance: basic tools & techniques necessary to making financial decisions. We will follow problem-based learning (PBL) to make sessions interesting and enjoyable. We will emphasize on “learning by doing“ and working on various problems and exercises in groups. You will be surprised realizing that studying finance can also be a fun.
Day one: Fundamentals of Finance and Investment
- What kind of business organization can I start?
- What is separation principles and what does “limited liability” mean?
- Where does Finance gets separated from Accounting?
- Who are financial managers? And what are their main tasks in a firm?
Day two: Basic valuation techniques and their application
- Why and how to consider the time value of money in financial decisions?
- How to develop complicated formulas easily without memorizing those?
- How to use valuation techniques in personal situations of mortgage, car loans, pension or savings plans etc.? (Group work with practical problems)
Day three: Valuation of bonds and stocks (shares)
- Determining the price of a bond
- Price: how much should I be willing to pay for a bond?
- How to calculate the yield-to-maturity (YTM) of a bond?
- What is the impact of the change in interest rates on bond valuation?
- Valuing shares/stocks
- How to calculate the price of stocks?
- How can I calculate the return on my investment in stocks?
- How and where to open an account to invest in the stock markets?
Day four: Fundamentals of capital budgeting
- What are the major techniques to evaluate investment projects?
- How to evaluate investment projects using those techniques?
- How to rank investment projects?
(Group work with practical problems)
Day five: Risk in Finance, Cost of Capital, and Financial Derivatives
- What is a risk in Finance and how to measure it?
- What is Capital Asset Pricing Model (CAPM) and how to use it?
- How to measure the cost of equity, the cost of debt, and weighted average cost of capital (WACC)?
- How to minimize risk by using portfolio theory?
- What are Forwards, Futures, and Options?
- How forward/Futures are used to hedge risk?
Teacher: Dr. Golam Robbani (firstname.lastname@example.org)
Suggested Text (buying the book is optional):
Berk, DeMarzo, and Harford, Fundamentals of Corporate Finance, Pearson (3rd global edition)
Moles, Parrino, and Kidwell (2011) Corporate Finance European Edition, Willey