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FM212 Principles of Finance
FM212 Principles of Finance
FM212 Principles of Finance
Principles of Finance
Part 1 (Michaelmas Term):
Portfolio Choice and Asset Pricing
Part 2 (Lent Term):
Capital Budgeting and Corporate Finance
Some of the slides herein include material copyrighted by McGraw-Hill; all
such material used with explicit consent of McGraw-Hill.
Introduction
Course Number: FM212 (undergraduates) or
FM492 (postgraduates)
Textbook: Principles of Corporate Finance by Brealey,
Myers and Allen, tenth edition
Calendar: 10 Two-hour lectures in Michaelmas term
10 Two-hour lectures in Lent term
2 Two-hour review lectures in Spring term
Schedule: Friday 12 noon 1 pm
Lunch Break
Friday 2 pm 3 pm
Some of the slides herein include material copyrighted by McGraw-Hill; all
such material used with explicit consent of McGraw-Hill.
Course Requirements
* Attend 20 One-hour classes
* Hand in two written home-works in Michaelmas (#4,#8) and Lent (#4,#8) terms
*Final Exam: Answer 2 out of three questions from Part A; 2 out of three questions from
Part B
Course Grading:
FM212
1st (>70)
2:1 (60-69)
2:2 (50-59)
3rd (40-49)
Fail (<40)
FM492
Distinction (>70)
Merit (60-69)
Pass (50-59)
Fail (40-49)
Bad Fail (0-39)
Some of the slides herein include material copyrighted by McGraw-Hill; all
such material used with explicit consent of McGraw-Hill.
Introduction
Investors
Purchasing
securities
Securities
Markets
FM212
Part 1
Issuing
securities
Capital
Projects
Capital
investment
Corporations
FM212
Part 2
FM212
Principles of Corporate Finance
Introduction
Investors
Dividends
and interest
received
Securities
Markets
FM212
Part 1
Dividends
and interest
paid
Capital
Projects
Profits
Corporations
FM212
Part 2
FM212
Principles of Corporate Finance
Present Value
How to Calculate Present Values
Value of Bonds and Common Stocks
Risk, Return and the Cost of Capital
Portfolio Theory and Asset Pricing Equilibrium
The Six Lessons of Market Efficiency
Put and Call Options
Options Pricing Theory
Valuing Government Bonds
Forwards and Futures
FM212
Principles of Corporate Finance
FM212
Principles of Corporate Finance
FM212
Principles of Corporate Finance
Summation Notation
Rather than write a long list of + signs it
is convenient to use a summation sign
m
y(i)
= y(1)
+ y(2)
+ ... + y(m)
i=1
i =1
FM212
Principles of Corporate Finance