Overview with Objectives:

Finance is a broad subject, and financial decisions are all around us. Whether you work on Wall Street or in a small company, finance is vital to every business. Therefore, understanding the fundamentals of finance is vital to your business education. This introductory unit addresses fundamental concepts of finance, stocks, and bonds. Also, Unit 1 exposes the importance of understanding ratios for financial statement analysis and analysis of cash flows. The main ratios explained are solvency (or liquidity ratios), financial ratios, profitability ratios, and market value ratios. In addition, you will learn about financial growth, what financial factors determine growth, the importance of maintaining a sustainable growth rate, and how to use financial statement information to manage growth. Consider this situation: You are the manager of a small retail chain and your boss has given you the task of deciding whether to invest in a second store. You know that adding a second store means a greater potential for growth. However, you also know that adding a new store will require spending cash. Facing this tough decision, how could you determine whether the company can "handle" such an investment? The answer might lie in ratio analysis. This section will explain how to use financial ratios to help you make these types of business decisions.

learning outcome:

• Concept &  Major    Areas   and    Opportunities   in Finance, 

• The Managerial Finance Function,

• Activities of the Financial Manager,

• Goals of a firm,

• Financial Institutions & Markets,

• Agency Problem.

Overview with Objectives:

Suppose you have the option of receiving $100 dollars today vs. $200 in five years. Which option would you
 choose? How would you determine which is the better deal? Some of us would rather have less money today vs. wait for more money tomorrow. However, sometimes it pays to wait. Unit 2 introduces the concept of the time value of money and explains how to determine the value of money today vs. tomorrow by using finance tools to determine present and future values. Also, Unit 2 exposes the concept of interest rates and how to apply them when multiple periods are considered.

learning outcome:

• Concepts,

• Importance, 

• Compounding, 

• Future value   & present value of   single  cash  flow,  

• Future value   & present value of Multiple   cash  flow,

• Annuity, 

• Discounting,

• Amortization Schedule

Overview with Objectives:

Unit 3 provides an explanation of the relationship between risk and return. Every investment decision carries a certain amount of risk. Therefore, the role of the financial manager is to understand how to calculate the "riskiness" of an investment so that he or she can make sound financial and business decisions. For example, you are the financial manager for a large corporation and your boss has asked you to choose between two investment proposals. Investment A is a textile plant in a remote part of a third world country. This plant has the capacity to generate $50 million dollars in yearly profits. Investment B is a textile plant located in the United States, near a small Virginia Town with a rich textile industry tradition. However, investment B's capacity for profits is only $30 million (due to higher start-up and operating costs). You are the financial manager. Which option do you choose? While investment A has the capacity to yield significantly higher profits, there is a great deal of risk that must be taken into consideration. Investment B has a much lower profit capacity, but the risk is also much lower. This relationship between risk and return is explained in this unit. Specifically, you will learn how to compute the level of risk by calculating expected values and the standard deviation. Also, you will learn about handling risk in a portfolio with different investments and how to measure the expected performance of a stock investment when it is being affected by the overall performance of a stock market. This unit puts what you have learned from the previous units about the cost of capital, net present value, and risk into one widely used model: The CAPM model. The CAPM model is used to compute a company's costs of capital that can be used in net present value calculations. It has been used in court cases for estimating a company's stock value as with the case of the breakup of AT&T in 1984 that resulted in seven companies. Also, the CAPM model is used in computing stock valuation. This unit will show how the financial manager uses this financial tool to value stock and to determine which stocks are the better options for investors, based on their rates of returns and how they compare to the overall stock market return.

learning outcome:

• What is the return?

• What is the risk-free rate?

• How does the Capital Asset Pricing Model help to compute return?

•  What is the expected return?

• What does CAPM calculate?

•  What is the expected rate of return?

• What is the required rate of return?

• What are the criteria to determine if a financial investment should it be made?

• What is the difference between systematic and unsystematic risk?

• What is beta and what does it measure?

• What is the expected return?

• What is the Capital Asset Pricing Model?

• How does CAPM connect the concepts of risk and return?

• What is the risk?

• What does it mean to be risk-averse?

• What does the financial manager consider when balancing risk with reward?