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FNCE10002 (54)

Class Notes for FNCE10002 at University of Melbourne

Principles of Finance

FNCE10002 Lecture Notes - Lecture 12: Standard Deviation, Spot Contract, Call Option
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Week 12Lecture12 Option Contracts Payoff and Profit on Put Options o The payoff to a put option buyer is: ,0 = stock price at expiration = Exercise (or s...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 11: Tax Rate, Chicago Mercantile Exchange, Dividend Policy
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Week 11Lecture11 Taxation of Dividends Classical Tax System o Used in Australia for all taxpayers from 1940 to 1987. Still applies to foreign companies in Australia. o ...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 9: Market Price, Systematic Risk, Capital Market
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Week 9Lecture9 Riskreturn Tradeoff with a Risky Portfolio and Riskfree Security The efficient frontier FF is an envelope of riskreturn frontiers made up of individual portfolio risky assets FF plots risky portfolios which ...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 4: Coca-Cola Vanilla, Net Present Value, Classic Case
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Week 4Lecture4 Definition of Capital Structure Capital structure is defined as: o The mix of debt and equity used by a firm Capital structure is measured by: o The debtequity ratio (DE), or o The debtfirm value ratio (DV),...

Finance
FNCE10002
Howard
FNCE10002 Lecture 2: Week 2 Lecture 2
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Week 2Lecture2 Valuing Perpetuities A perpetuity is an equal periodic cash flow that goes on forever The present value of a perpetuity is o = + + + + + 0 1+ 1+ ) 1+ ) (1+)+1 1 1 1 1 o 0 1+ + (1+)2+ + (1+) + (1+)+1 + ] 1 1 ...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 1: Price Discovery, Interest, Accrued Interest
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Week 1Lecture1 Subject Objectives Use financial mathematics to solve basic financial problems Apply alternative capital budgeting techniques for project evaluation purposes Explain the role of risk and return in the asset ...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 3: Common Stock, Dividend Payout Ratio, Irredeemable
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Week 3Lecture3 Difference between debt and equity Debt: interest and principal must be paid as promised o Lenders rank higher than equity holders. That is, lenders must be paid from operational cash flows before any distri...

Finance
FNCE10002
Howard
FNCE10002 Lecture 8: Week 8 Lecture 8
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Week 8Lecture8 Assumptions of Portfolio Theory The two main assumptions of modern portfolio theory are: Returns on assets are normally distributed o Returns are measured over one feature time period o Return as at the end ...

Finance
FNCE10002
Howard
FNCE10002 Lecture 6: Week 6 Lecture 6
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Week 5Lecture5 Comparing the IRR and NPV Methods Independent projects are projects that can be evaluated on their own, that is, independently of each other o The decision to accept a project does not affect the decision to...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 10: Dividend Payout Ratio, Australian Taxation Office, Capital Gains Tax
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Week 10Lecture10 CAPM Empirically Valid? Are the CAPMs assumption realistic? o A models assumptions are simplifications of reality o The real concern is how the CAPM performs empirically Can the CAPM be tested? o CAPM refe...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 5: Sunk Costs, Tax Shield, Net Present Value
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Week 5Lecture5 Comparing the IRR and NPV Methods Independent projects are projects that can be evaluated on their own, that is, independently of each other o The decision to accept a project does not affect the decision to...

Finance
FNCE10002
Howard
FNCE10002 Lecture Notes - Lecture 10: Kolmogorov Space, Put Option, Net Income

X. Introduction to Derivative Securities I A. Examine what forward and futures contracts are and how they are traded Overview of derivative markets o Derivative contract: instrument whose value derives from that of an unde...

Finance
FNCE10002
Howard Chan
FNCE10002 Lecture Notes - Lecture 8: Expected Return, Systematic Risk, Capital Asset Pricing Model

VIII. Capital Asset Pricing Model (CAPM) A. Explain the relation between systematic risk and expected return using the CAPM 11.7 The Capital Asset Pricing Model The CAPM model o Used to price individual securities Estimati...

Finance
FNCE10002
Howard Chan
FNCE10002 Lecture Notes - Lecture 9: Life Insurance, Net Present Value, Corporate Tax

9.1 Payout Policy I A. Introduction to Payout Policy Lecture: Introduction to payout policy Free cash flow (FCF): cash that a firm can generate after spending the money to maintain or expand its asset base. o Operating cas...

Finance
FNCE10002
Howard Chan
FNCE10002 Lecture Notes - Lecture 11: Capital Asset Pricing Model, Capital Market, Rationality

XI. Market Efficiency, Competition and Frictions A. Examine the concept of capital market efficiency Informationally efficientefficient markets hypothesis (EMH) o If prices instantaneously and unbiasedly reflect all availa...

Finance
FNCE10002
Howard Chan
Permachart - Marketing Reference Guide: New York Stock Exchange, Nyse American, Market Trend

l e a r n • r e f e r e n c e • r e v i e w permacharts TM Stocks & Bonds WHAT IS A STOCK? WHAT IS A BOND? ...

Biology
BIOL2761
All Professors
Permachart - Marketing Reference Guide: Net Asset Value, Mutual Fund, U.S. Securities And Exchange Commission

l e a r n • r e f e r e n c e • r e v i e w permacharts TM Mutual Funds WHAT IS A MUTUAL FUND? PURCHASING & REDEE...

Biology
BIOL2721
All Professors

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