Finance

Welcome and thank you for your time reading and finding materials in this blog. The topics are suitable to courses in finance. Here you will find materials on topics such as Financial Analysis/ Interpretation of Financial Statements, Corporate Finance/ Financial Management, Investments, Derivatives and Risk Management. You are suggested to keep minimum one copy of text book for each module, a scientific calculator. In addition, you should have good command of using MS Word and Excel.

Interpretation of Financial Statements/ Business and Financial Analysis

Lecture Notes

1_Introduction 2_BusinessAnalysis 3_FinancialAnalysis 4_FinancialStatements 5_BalanceSheet 6_IncomeStatement 7_CashFlowStatement 8&9_Financial Statement Analysis for Credit 10_AnalysingInternalFinancialStatements 11_Financial Statement Analysis for Equity

Exercises

2_session 3_session 5_session 6_session 7_session 8_session 9_session 10_session 11_session

Case Study – The Oil Industry: TheOilSector The work in Excel: Oil&GasCompared

Assignment Question : Assignment, AssignmentQuestion2 and AssignmentQuestion2SampleAnswer

Detail of sessions: TheDashboard

Articles, Sources/ other reading list

2001_Purcell_Session2toolsrelated 2003_NissimPenman_Leverage 2008_Epstein_etal_InternalFinancialStatements 2008_Suliman_DuPont Sources

British Accounting Association: British organization of accounting researchers, teachers, and practitioners. http://www.baa.group.shef.ac.uk/

Sources of financial and business information

Business Week: http://www.businessweek.com, The Economist: http://www.economist.com, Eurostat: Site of the Statistical Office of the European Communities. This site is also a good source for historical European long-term government bond yields. http://epp.eurostat.ec.europa.eu/, Financial Times: http://www.ft.com, Reuters: Site with the latest financial and business news and a wide collection of company data, such as company’s recent financial statements, company news, consensus forecasts, ownership, and officer/director details. http://www.reuters.com

International organizations

Committee of European Securities Regulators (CESR): http://www.cesr-eu.org, The European Union: http://europa.eu/index_en.htm, International Accounting Standards Board (IASB): http://www.iasb.org

Academic journals publishing articles about financial analysis

The Accounting Review: http://aaahq.org/pubs/acctrev.htm, Contemporary Accounting Research: http://www.caaa.ca/CAR/, European Accounting Review: http://www.tandf.co.uk/journals/titles/09638180.asp, Financial Analysts Journal: http://www.cfapubs.org/loi/faj, Journal of Accounting Research: http://www.chicagogsb.edu/jar/, Journal of Accounting and Economics: www.elsevier.com/locate/jae, Journal of Business Finance and Accounting: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X, Journal of Financial Economics: http://www.jfe.rochester.edu/, Review of Accounting Studies: http://groups.haas.berkeley.edu/RAST/index.html

Free Book: The Executive Guide to Business Valuation: http://www.iacam.org/categories/freebook

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Risk Management
Market Risk, Value at Risk
Three common methods are explained.

1. Variance Covariance
2. Historical Simulation
3. Monte Carlo Simulation, Lecture Slides: Monte Carlo Simulation, Numerical Example S&P 500: MCS S&PP500 , Numerical Example, Portfolio of five stocks: Here.

Corporate Finance/ Financial Management

Ivo Welch, a professor at UCLA, has written a corporate finance textbook with a free online edition and a low-cost print edition. Some of my notes are available below.

Introduction

1_ConceptMap 2_Introduction 3_Exercise 4_Exercise_Answers 5_Case 6_Case_Suggested_Answers

Time Value of Money

1_LectureNote_TimeValueofMoney 2_GraphFVPV 3_Amortisation Exercise_Question 4_AmortisationExample_format 5_AmortisationExample_solution 6_PeterM_DiscussionExercise_compoundFV 7_practicequestions_BrealeyNMyers 8_PVnFVtables

Capital Budgeting Techniques

0_ConceptMap 1_LectureNote_CapitalBudgeting 2_Techniquesincluding_NPV_and_IRR 3_NpvIrrMirr_Example 4_MCQ_CapitalBudgeting 5_QuickCheck_capbudgeting

Investment Appraisal

1_LectureNote_DiscountedCF_and_NPV 2_Example_lastSlide_Lecture_Note 3_Case_Exercise_1_DiscountedCF_and_NPV_uptoDiscussion8 4_Case_Exercise_1_DiscountedCF_and_NPV_UptoDiscussions8 5_Case_Exercise_2_DiscountedCF_and_NPV_Question_and_Discussions_Complete 6_Case_Exercise_2_DiscountedCF_and_NPV_Complete 7_Case_Exercise2_NPV_Jaffe 8_CaseStudy_NumericalAnswers_Jaffe 9_Sensitivity_good_one_internet_Busn233Ch09

International Investment Appraisal: CaseStudy-International Investment Appraisal Exercise, CaseStudy_solution,  Discussion Video

Other Techniques: APV, Exercise Question, Solution, Discussion video

Capital Structure Theories

Lecture Notes, Discussion Exercise, Discussion video

Recommended to read journal articles including MM (1958), MM (1963), Myers (1984), Fama and French (2002)

Cost of Capital

1_lectureNote_CostofCapital_2010_Binam 2_capstructureNriskadjustedBeta 3_CostofCapitalPractice_Excel1 4_derivation_formula_DGM4Ks RReturndata

Working Capital and Dividend Policy

Working Capital Lecture Note, Dividend_Policy_Basics

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Investments

Bonds:

Lecture Slides and Excel Exercise Materials available here, Slides: BondFundamentals, AnalysisandValuationofBonds_I, AnalysisandValuationofBonds_II, Excel Files: DiscountOrPremiumExercise1Exercise2Exercise3exercisefile_supportingslidesonBonds_PriceandVolatility Youtube Videos: 1, 2, 3, 4, 5, 6 ,7, 8

Portfolio Performance Evaluation

Lecture slides and Excel Exercise Materials available here, Slides: PortfolioPerformance_Techniques . Videos below 1 -6 provides numerical illustrations to four popular composite performance measures namely – Treynor, Sharpe, Jensen, information ratios. Relevant excel file for the four methods:  4methodsExamples

Videos below 7 and 8 provide discussions with numerical examples on M2 and Sortino ratio respectively. Excel file is 2methods_M2_Sortino_Examples

Video 9 -11 is about Modified Sharpe ratio. Excel files are MSR_NumericalExample_Simple, MSR_IsraelsenPaperExampleVideo 12 is about Portfolio Attribution analysis. Excel file is attributionAnalysis_Example , Video 13 provides illustration of a pension fund performance. Excel file is PensionFundData_Question .

Videos 14-16 are on returns. Video 17 discusses a simple data which is used in subsequent videos to evaluate the portfolio performance. Therefore videos 18 and 19 are comparing portfolio performance with benchmark and a number of returns and risk adjusted return techniques are applied.

Youtube videos: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13

The link is not working for some reason. I have therefore appended the youtube link direct here, they are in order as mentioned above.

Two good text are by 1) Bodie, J., Kane, A., and Marcus, A. (2007) Investments, McGraw-Hill and 2) Brown, K. and Reilly, F. (2012) Analysis Investments and Management of Portfolios, 10th Edition (International Student), Cengage

Support Files: Discussion video,

Application of Fama and French (1993) three factor model for large listed British Stocks: Fama and french1993, Application_FFonFTSE100, Discussion Video

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Derivative Securities

Book by John C Hull [Hull J. (2009) Options, Futures and Other Derivatives, 7th Ed., Pearson] is very widely used text. Lecture notes for the chapters are available below. Text book including the lecture slides can also be found through google search.

In the text book, the questions are available at the end of every chapter and you are recommended to look into the questions for chapters 1-3, 5-11, 13, 15 and 20.