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Sous-titres : Anglais

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Sous-titres : Anglais

Programme du cours : ce que vous apprendrez dans ce cours

Semaine
1
5 heures pour terminer

Why Finance Matters? Net Present Value. How to Calculate NPV

In Week 1 we propose the game plan for our study of value. Then we analyze the key assumptions for the general valuation model. We focus on the understanding of the sources of value and the fundamental ideas of investor’s choice, the opportunity cost of capital, risk and return. We discuss the importance of time and expectations in determining value. Then we discuss the present value approach to studying the projects’ value and choice. We present the general PV formula and introduce the key concept of net present value (NPV) as a criterion of the choice of good investment projects. Then we study some most widely used shortcuts and apply the formulas to find the NPV’s of certain projects that play a special role in valuation. We end up with the general NPV formula and discuss the challenges in using it.

...
10 vidéos (Total 79 min), 6 lectures, 2 quiz
10 vidéos
1.1. Introduction – the idea of value6 min
1.2. The game plan – a jumbo jet taking off5 min
1.3. The valuation model – key assumptions11 min
1.4. The opportunity cost of capital6 min
1.5. Introducing PV and NPV12 min
1.6. PV calculation shortcut (1) – perpetuities9 min
1.7. PV calculation shortcut (2) – annuities6 min
1.8. A fixed rate mortgage – an example of PV11 min
1.9. The general NPV formula4 min
6 lectures
Konstantin Kontor10 min
AIBEc. The American Institute of Business and Economics10 min
Grading10 min
Handouts – an important comment10 min
1.1. Introduction: why finance matters1 h
1.2. How to calculate present value10 min
2 exercices pour s'entraîner
1 (Practice)20 min
1 - The power of PV calculations1 h
Semaine
2
4 heures pour terminer

Applications of NPV. Valuing Bonds and Stocks

Week 2 of the Course is devoted to the applications of NPV. In the first part of the week we use NPV to study riskless debt. Of special attention will be the challenges in valuing even riskless bonds. We discuss bond parameters and the special role of yield to maturity. Then we demonstrate how the NPV approach helps determine spot and forward interest rates. The second part of Week 2 deals with the core concepts in valuing equity. We introduce the idea of the common stock value as a function of its cash disbursements. Then we present some formulas that are used to value common stock on the basis of NPV. We focus on growth as a major contributor to the stock value. We analyze growth drivers and the mechanism of growth. On an example we reveal the influence of investments on the stock value. Finally, we pose some questions with respect to NPV approach.

...
10 vidéos (Total 68 min), 3 lectures, 2 quiz
10 vidéos
2.2. Valuing riskless debt6 min
2.3. Bond cash flows and other parameters. Yield to maturity10 min
2.4. Calculating spot rates8 min
2.5. Forward rates – the idea and calculation8 min
2.6. Valuing common stocks – the expected rate of return5 min
2.7. The general stock valuation formula. The “tail”7 min
2.8. The model of growth. PVGO5 min
2.9. A constant growing company – an example10 min
2.10. – What’s ahead?2 min
3 lectures
2.1. Application of NPV (1) – valuing riskless bonds1 h
2.2. Application of NPV (2) – valuing common stocks10 min
2.3. Analyzing growth10 min
2 exercices pour s'entraîner
2 (Practice)20 min
2 - PV of bonds and stocks – models and market values1 h
Semaine
3
4 heures pour terminer

Making the Choice of Good Investment Projects. NPV and Other Criteria. Why Is NPV Better?

We start Week 3 of the Course by the discussion of criteria of choosing investment projects. Beside NPV, the internal rate of return (IRR) and other approaches are introduced. We show why the NPV criterion is the best and why the application of others may lead to wrong investment decisions. Then we focus on the main ideas to be taken into account while setting up cash flow patterns and making the choice of project on the basis of NPV. We mention some special issues – relevant costs, depreciation, inflation. We present the concept of equivalent annual cost (EAC) as a method of comparing projects of different length. Then we study the application of EAC in greater detail in a case.

...
12 vidéos (Total 106 min), 2 lectures, 2 quiz
12 vidéos
3.2. Other criteria – pluses and minuses8 min
3.3. Internal rate of return (IRR)8 min
3.4. Problems with IRR – it’s not exactly like NPV!12 min
3.5. Using NPV – what should we know3 min
3.6. NPV and cash flows. Some accounting details11 min
3.7. Sunk costs – opportunity costs – relevant costs10 min
3.8. Depreciation – an overview relevant to cash flows5 min
3.9. Discount rates – nominal and real. The role of inflation6 min
3.10. Projects of different length. Equivalent annual cost (EAC)9 min
3.11. EAC – an example11 min
3.12. Conclusions and unanswered questions10 min
2 lectures
3.1. Equivalent annual cost (EAC)1 h
3.2. Case – comparing two heating systems10 min
2 exercices pour s'entraîner
3 (Practice)20 min
3 - The problems of IRR and the power of EAC1 h
Semaine
4
5 heures pour terminer

Risk and Return – From Basics to Reality

In Week 4 we study risk and return. We present a stochastic mathematical model of risk and apply it to find the returns and standard deviations of portfolios of assets. We discuss diversification and the role of special portfolios – the riskless portfolio and the market portfolio – in approaching asset risk. We demonstrate how any asset contributes to the market risk and introduce the β coefficient. Then we derive the capital asset pricing model (CAPM) and study how it is used on examples. We discuss the application of the company cost of capital (CCC) rule to choosing investment projects. Then we use CAPM to determine the cost of capital – first, for an equity-financed company and then in the general case with debt and equity. We present the weighted average cost of capital (WACC) formula and discuss it. Finally, on an example we study the steps in applying CAPM.

...
11 vidéos (Total 100 min), 4 lectures, 2 quiz
11 vidéos
4.2. The expected return and the standard deviation for a portfolio of securities. Some empirical evidence9 min
4.3. Diversification. “Special” portfolios6 min
4.4. Contribution to the portfolio risk. β6 min
4.5. Efficient portfolios. The market portfolio’s efficiency7 min
4.6. Capital asset pricing model (CAPM). Examples9 min
4.7. The company cost of capital (CCC) rule10 min
4.8. Applying CAPM – a no debt case4 min
4.9. Applying CAPM – the general case. WACC13 min
4.10. Steps in applying CAPM – an example15 min
4.11. Conclusions. The roadmap to determining WACC. Some objections to using normal distributions7 min
4 lectures
4.1. Mathematics of risk – an overview1 h
4.2. Risk and return (1) – the game plan and diversification10 min
4.3. Risk and return (2) – market risk and asset pricing10 min
4.4. Risk and return (3) – cost of capital10 min
2 exercices pour s'entraîner
4 (Practice)20 min
4 - Returns, betas, and the cost of capital1 h

Enseignant

Avatar

Konstantin Kontor

Director and Professor of Finance and Strategy
American Institute of Business and Economics (AIBEc)

À propos de Institut de physique et de technologie de Moscou

Московский физико-технический институт (Физтех) является одним из ведущих вузов страны и входит в основные рейтинги лучших университетов мира. Институт обладает не только богатой историей – основателями и профессорами института были Нобелевские лауреаты Пётр Капица, Лев Ландау и Николай Семенов – но и большой научно-исследовательской базой. Основой образования в МФТИ является уникальная «система Физтеха», сформулированная Петром Капицей: кропотливый отбор одаренных и склонных к творческой работе абитуриентов; участие в обучении ведущих научных работников; индивидуальный подход к отдельным студентам с целью развития их творческих задатков; воспитание с первых шагов в атмосфере технических исследований и конструктивного творчества с использованием потенциала лучших лабораторий страны. Среди выпускников МФТИ — нобелевские лауреаты Андрей Гейм и Константин Новоселов, основатель компании ABBYY Давид Ян, один из авторов архитектурных принципов построения вычислительных комплексов Борис Бабаян и др....

À propos de American Institute of Business and Economics

The American Institute of Business and Economics (AIBEc) offers a wide variety of business courses in finance, accounting, marketing, strategy, HR, business law, economics, general management, business psychology, as well as course projects and the Field study. AIBEc provides for flexibility and customization of programs and schedules....

À propos de la Spécialisation Understanding Modern Finance

This Specialization is designed for a wide audience of those interested in finance either professionally or just of curiosity, including managers of different levels specializing in finance, accounting, business planning, strategy, consulting, and project management, IT specialists engaged in the area of finance, fin-tech, big data, and valuation, etc. Through four courses and the final Project, you will cover the theory and practice of capital markets and financial institutions, corporate finance and project valuation, financial and managerial accounting as applied to finance, as well as the M&A market as the ultimate judge of financial efficiency and value creation. The Specialization will prepare you to understand and use the applications of financial ideas, concepts, models, strategies, and tools to build a successful career in finance and in business, as well as to take advantage of opportunities offered by financial markets....
Understanding Modern Finance

Foire Aux Questions

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