Fundamentals of Finance - Brooklyn Youth Charitable Investment Group

Fundamentals of Finance

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About Course

A course adapted from the resources of Professor Aswath Damodaran.

Course Content

Introduction
Beginning with the foundations for finance, accounting, and valuation.

Lesson 1; Introduction
WSJ Article: CSFB Strategist’s Stock Approach Builds New Economy Following

The Structure of a Business
Introduces the notion of a financial balance sheet and the choices when it comes to funding, linking to the idea of a corporate life cycle.

Cash Flows
Define cash flows, contrasts with earnings and differentiates incremental & residual cash flows.

What is risk?
An introduction to risk and how risk aversion plays out in risk measurement.

Measuring Risk.
Introduction to the risk/reward tradeoff and how diversification enters and alters that trade off.

The Time Value of Money
Looks at the intuition behind why money has time value and the mechanics of present value.

Valuing Contractual Claims (Bonds)
Presents the structure for valuing assets with contractually set claims (like bonds) and how default risk affects that value.

Valuing Residual Claims (Equity)
Lays the foundations for valuing claims on residual cash flows (like equity) and how risk plays out in that value.

Valuing Contingent Claims (Options)
Sets up the process for valuing assets with cash flows contingent on something happening, and the basics of option pricing models.

Inflation
Understand the causes and measures of inflation and how they play out in valuation.

Interest Rates
Looks at both the forces that cause interest rates to change over time and the institutions involved in the process (central banks, markets)

Exchange Rates
Covers the forces that make exchange rates change over time and ways of forecasting exchange rates.

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About Course

What Will You Learn?

Course Content

Introduction Beginning with the foundations for finance, accounting, and valuation.

Lesson 1; Introduction

WSJ Article: CSFB Strategist’s Stock Approach Builds New Economy Following

The Structure of a Business Introduces the notion of a financial balance sheet and the choices when it comes to funding, linking to the idea of a corporate life cycle.

Lesson 2: The Structure of a Business

Investment Basics: Courtesy of Motley Fool (Resource from the early 2000s)

The Structure of a Business Quiz

Cash Flows Define cash flows, contrasts with earnings and differentiates incremental & residual cash flows.

Lesson 3: Cash Flows

Extra Credit: A letter to Warren Buffet from a non-admirer.

Cash Flows Quiz

AIG: A complex industry, a very complex industry. (WSJ)

What is risk? An introduction to risk and how risk aversion plays out in risk measurement.

Lesson 4: What is risk?

Risk Quiz

Coca-Cola: The Real Thing Can Be Hard to Measure (WSJ)

Measuring Risk. Introduction to the risk/reward tradeoff and how diversification enters and alters that trade off.

Lesson 5: Measuring Risk

Risk Measurement Quiz.

General Electric: Some Seek More Light On the Finances (WSJ)

The Time Value of Money Looks at the intuition behind why money has time value and the mechanics of present value.

Lesson 6: The Time Value of Money

Time value of money quiz.

IBM: Unexplained Expenses Can Mean Other Opinions (WSJ)

Valuing Contractual Claims (Bonds) Presents the structure for valuing assets with contractually set claims (like bonds) and how default risk affects that value.

Lesson 7: Valuing Contractual Claims (Bonds)

Valuing Contractual Claims (Bonds)

Williams: Enron’s Game But Played With Caution (WSJ)

Valuing Residual Claims (Equity) Lays the foundations for valuing claims on residual cash flows (like equity) and how risk plays out in that value.

Lesson 8: Valuing Residual Claims (Equity)

Valuing Residual Claims (Equity)

In for the Long Haul: Activist Investors (WSJ)

Valuing Contingent Claims (Options) Sets up the process for valuing assets with cash flows contingent on something happening, and the basics of option pricing models.

Lesson 9: Valuing Contingent Claims (Options) [ Extra Hard ]

Valuing Contingent Claims (Options)

Roy Disney Steps Down: Letter of Resignation

Inflation Understand the causes and measures of inflation and how they play out in valuation.

Lesson 10: Inflation

Inflation

Valuing Disney: What Is a Mouse Worth? (Laura Holson and Andrew Ross Sorkin)

Interest Rates Looks at both the forces that cause interest rates to change over time and the institutions involved in the process (central banks, markets)

Lesson 11: Interest Rates

Interest Rates Quiz

Classic Rule of Risk Premium is Under Attack from Bulls (WSJ)

Exchange Rates Covers the forces that make exchange rates change over time and ways of forecasting exchange rates.

Lesson 12: Exchange Rates

Exchange Rates

A Tangled Web of Values: Enterprise value, firm value, and market cap. (Aswath Damodaran)

Student Ratings & Reviews

Introduction
Beginning with the foundations for finance, accounting, and valuation.

The Structure of a Business
Introduces the notion of a financial balance sheet and the choices when it comes to funding, linking to the idea of a corporate life cycle.

Cash Flows
Define cash flows, contrasts with earnings and differentiates incremental & residual cash flows.

What is risk?
An introduction to risk and how risk aversion plays out in risk measurement.

Measuring Risk.
Introduction to the risk/reward tradeoff and how diversification enters and alters that trade off.

The Time Value of Money
Looks at the intuition behind why money has time value and the mechanics of present value.

Valuing Contractual Claims (Bonds)
Presents the structure for valuing assets with contractually set claims (like bonds) and how default risk affects that value.

Valuing Residual Claims (Equity)
Lays the foundations for valuing claims on residual cash flows (like equity) and how risk plays out in that value.

Valuing Contingent Claims (Options)
Sets up the process for valuing assets with cash flows contingent on something happening, and the basics of option pricing models.

Inflation
Understand the causes and measures of inflation and how they play out in valuation.

Interest Rates
Looks at both the forces that cause interest rates to change over time and the institutions involved in the process (central banks, markets)

Exchange Rates
Covers the forces that make exchange rates change over time and ways of forecasting exchange rates.