Welcome everyone to our corporate finance course, the second course or capital markets specialization. At the very end of the first course, the capital markets and financial institutions, we realized that we learned a lot to be more protected against potential market threats. But I also mentioned that in order to benefit from the understanding of the markets, we have to know a lot more. What exactly do we have to know? Because we are starting to analyzing this right now. We have to understand how people in capital markets, in the process of interaction, they create value. Value is the key story in this course. And if it was asked like, what is the only word here? I would clearly say value, corporate finance is about value. Now, what exactly do I mean by that when I said that people interact somehow? Let's put the following. Well, remember, last course, I oftentimes use this chart with blue bags, black businesses and then the red intermediaries. Here, we will start with an even simpler thing. Well, let's say that this is the sample balance sheet of a company. So here are assets. Here, we have liabilities and net worth, so this is net worth. And what are assets for us? For us, in this course, assets are just black boxes that produce cash flow. So remember I said that these black boxes, they are magic in the following way. So if they use the money, their own money or someone else's money, then they swallow this money, something happens within those black box, and then more money, namely more cash flow is being produced. So this is the magic feature of a business. And basically we said that, that's a great thing. But unfortunately, this is not without risk that sometimes these black boxes not only produce markets, but sometimes they produce less cash or they maybe produce nothing. Now, these are the liabilities of this business. These are the people here who provide cash. And these people, basically, these are the owners of the company. These are other people who provide cash in the form of debt or in the form of equity, but not equity of these owners, but sometimes that is sort of a hybrid thing, so I would put, in more general thing, something here. But for us, the important thing is the first question, where is value created? Well, it's not such a simplistic question. Because oftentimes, people say, well, value is created here, definitely. So black box is great. Value, so we put it like this. But we know that in capital markets, the main players are investors. So basically the people on this side, what produces value for them? Well, the value of these blue circles and the value of equity actually results from the fact that these people have claims against cash flow produced by these black boxes. This is the key story. So if for example, you own a share of stock as an individual, this is your asset. So that produces cash for you, in what form? Because you as a shareholder have the right to obtain cash dividends if and when the company pays it out, or you have the ability to sell the stock and then get a cash inflow. If you're a bondholder, then your value comes in the form that the company promised to pay you certain coupon payments and then the principal payment at a certain period of time. So that is a key story to realize here. And then, there is basically just one question in this course, and I'll put it in the red. And the question is, what boxes are good? So if we found the way to fix labels like, this is a good box, this is a good box, so this is a bad box, then the investors would make the choice, they would like to get good boxes and they would like to refrain from getting bad boxes. Well, first of all, as of now, we do not know what makes the box good. So, we first have to realize what makes a box good and how then to affix this label? So that leads to the most fundamental process in this course that we will be pursuing all the way, this is the process of valuation. Valuation is actually the process of finding value that is behind these boxes. And then, we will introduce a general framework for that and then we'll compare that to something. And again, for now, I am saying in a very vague form. But I have to tell you that throughout this course, we will apply certain fundamental frameworks to approach value, and then we will study value for large variety of assets. So we will do valuation throughout this course, and we will start from the most simplistic things, and then we will proceed to something much more advanced. Now, in the next short episode, I will update you as to what is the game plan here. How we will proceed, where we start, and how we arrive at the final valuable conclusions that will indeed allow us benefit from capital markets.