Appunti VERIFICATO
Finance and Risk management
Cattolica del Sacro Cuore innovation and technology management Curriculum innovation process management 2025
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- Corporate Finance Fundamentals: Explores the financial implications of business decisions and the role of corporate governance in a firm's direction and performance, outlining various firm structures.
- Objective of the Firm: Discusses the traditional goal of maximizing total firm value, emphasizing stockholder value due to their role as residual claimants and their incentive to monitor management.
- Financial Statements: Covers the Balance Sheet (snapshot of assets, liabilities, equity), Income Statement (profit/loss over a period), and Cash Flow Statement (operating, investing, financing activities), contrasting accrual vs. cash accounting.
- Financial Ratios: Introduces categories like profitability (NPV, ROA, ROE), liquidity, leverage, and asset turnover for financial analysis, including the Du Pont identity.
- Capital Budgeting Techniques: Explains criteria for investment decisions, including Net Present Value (NPV - preferred for directly measuring value), Internal Rate of Return (IRR), Payback Rule, and Average Accounting Return (AAR), noting their advantages and disadvantages.
- Time Value of Money (TVM): Defines present value (PV) and future value (FV), simple vs. compound interest, and how to value multiple cash flows, considering risk and opportunity cost.
- Bond Valuation: Discusses bond definitions (par value, coupon rate, YTM), bond value calculation, and interest rate risks (price risk, reinvestment rate risk).
- Risk and Return: Covers systematic risk (undiversifiable, measured by Beta) and firm-specific risk (diversifiable). Introduces the Capital Asset Pricing Model (CAPM) to estimate the cost of capital.
- Capital Structure Decisions: Explores the optimal mix of debt and equity, including the Modigliani-Miller theorem (relevance of capital structure in perfect markets) and the trade-off theory.
- Costs and Benefits of Debt: Examines tax benefits (interest deductibility), debt as a disciplinary tool for managers, and the various direct and indirect costs of bankruptcy. It also addresses agency problems (debt overhang, risk shifting) and how creditors react.
- Equity Financing: Discusses private equity, Initial Public Offerings (IPOs) – including the process, valuation, risk management, and underpricing – and Seasoned Equity Offerings (SEOs), along with the Pecking Order Theory and the impact of adverse selection.
- Real Options: Introduces financial options (call, put) and real options in capital investment, utilizing decision tree analysis for managing future decisions and uncertainty, such as the option to delay, grow, or abandon.
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