Corporate Finance Essentials

About this course: Corporate Finance Essentials will enable you to understand key financial issues related to companies, investors, and the interaction between them in the capital markets. By the end of this course you should be able to understand most of what you read in the financial press and use the essential financial vocabulary of companies and finance professionals.

Created by:  IESE Business School

  • Javier Estrada
    Taught by:  Javier Estrada, Professor of Financial Management
    Department of Financial Management
Commitment7 weeks of study, 2-3 hours/week
EnglishSubtitles: Chinese (Simplified)
How To PassPass all graded assignments to complete the course.
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Course Overview
Overall Syllabus 
1 reading
  1. Reading: Syllabus
Risk and Return
Welcome to Session 1 In this session we will discuss some basic but essential financial concepts such as mean return, volatility, and beta. We will also learn how to apply them in order to assess the performance of selected equity markets over the last decade. The learning objective is to understand the basic, essential, and widely used financial concepts.
7 videos3 readings
  1. Reading: About this session
  2. Video: 1. What is this course all about?
  3. Video: 2. Periodic Returns
  4. Video: 3. Arithmetic and Geometric Mean Returns
  5. Video: 4. Evidence
  6. Video: 5. Volatility
  7. Video: 6. Beta
  8. Video: 7. A brief recap
  9. Reading: Readings
  10. Reading: Intro to Quiz 1
Graded: Quiz 1
Correlation and Diversification
To understand diversification, an issue at the very heart of most investment decisions, and the role that correlation plays in determining the gains from diversification. 
7 videos3 readings
  1. Reading: About this session
  2. Video: 1. Recap on the Previous Session
  3. Video: 2. Portfolio Risk
  4. Video: 3. The Correlation Coefficient
  5. Video: 4. The Importance of Correlation
  6. Video: 5. Diversification and Correlation Part 1
  7. Video: 6. Diversification and Correlation Part 2
  8. Video: 7. Diversification, Correlation and Portfolios
  9. Reading: Readings
  10. Reading: Intro to Quiz 2
Graded: Quiz 2
The CAPM and the Cost of Capital
In this session we will discuss how companies assess their cost of debt, their cost of equity, and ultimately their cost of capital. We will also discuss why this last concept is at the heart of many of the most important corporate decisions. 
7 videos3 readings
  1. Reading: About this session
  2. Video: 1. What is the cost of capital?
  3. Video: 2. Three ways to think about the cost of capital
  4. Video: 3. Components and notation
  5. Video: 4. The debt tax shield
  6. Video: 5. The cost of debt
  7. Video: 6. The cost of equity
  8. Video: 7. The CAPM
  9. Reading: Readings
  10. Reading: Intro to Quiz 3
Graded: Quiz 3
Estimating the Cost of Capital - An Application
In this session we will put to work all the concepts discussed in the previous session by estimating the cost of capital of a company. As usual, when putting theory into practice, a few complications arise and we will discuss how to deal with them. 
3 videos3 readings
  1. Reading: About this session
  2. Video: 1. Recap on the previous session
  3. Video: 2. Estimating the cost of capital: Starbucks
  4. Video: 3. Estimating the cost of capital: Starbucks; A Few Rounding Comments
  5. Reading: Readings
  6. Reading: Intro to Quiz 4
Graded: Quiz 4
Project Evaluation
In this session we will discuss how companies routinely decide whether or not to invest in projects. We will discuss the two tools most widely used for this purpose, NPV and IRR, and apply them to the evaluation of an investment opportunity. 
8 videos3 readings
  1. Reading: About this session
  2. Video: 1. What is this all about?
  3. Video: 2. Introduction to the Net Present Value (NPV)
  4. Video: 3. The Net Present Value (NPV)
  5. Video: 4. The Internal Rate of Return (IRR)
  6. Video: 5. Shortcomings of the IRR
  7. Video: 6. Evaluating an investment opportunity
  8. Video: 7. Discount rates across countries or divisions
  9. Video: 8. Discount rates over time
  10. Reading: Readings
  11. Reading: Intro to Quiz 5
Graded: Quiz 5
Corporate Value Creation
In this session we will discuss EVA, a tool widely used to assess whether a company is creating or destroying value. We will also put this tool into practice by estimating the EVA of two companies. 
6 videos3 readings
  1. Reading: About this session
  2. Video: 1. Corporate value creation
  3. Video: 2. Growth and return on growth
  4. Video: 3. Economic value added (EVA)
  5. Video: 4. EVA: Two examples
  6. Video: 5. EVA levels versus EVA changes
  7. Video: 6. Brief wrap up
  8. Reading: Readings
  9. Reading: Intro to Quiz 6
Graded: Quiz 6
How It Works
Each course is like an interactive textbook, featuring pre-recorded videos, quizzes and projects.
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IESE Business School
For over fifty years, IESE, the graduate business school of the University of Navarra, has been at the forefront of management education, developing and inspiring business leaders who strive to make a deep, positive and lasting impact on the people, companies and society they serve.
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