Essentials of Financial Management
Published on 7. January 2019
Book
Paperback/Softback
192 pages
978-1-78694-205-0 (ISBN)
Description
An Open Access edition of this book is available on the Liverpool University Press website (https://www.liverpooluniversitypress.co.uk/pages/essentials-of-financial-management-efm).
Essentials of Financial Management is an Open Access e-textbook (paperback edition also available) suitable for students with limited knowledge of finance and financial markets. It answers the main questions of a corporate entity, such as how businesses finance their activities, how they select projects to invest in, the distribution of net cash flow and, of increasing importance, how businesses manage price risk relating to cost of goods sold or a decline in revenue. In providing invaluable guidance to finance, management and business students, Essentials of Financial Management employs two main philosophies: that finance is a real-life subject and that finance is a numerical subject, which is why this brilliant e-textbook contains real world examples as well as numerous Excel spreadsheet solutions for students to download and use.
Essentials of Financial Management is an Open Access e-textbook (paperback edition also available) suitable for students with limited knowledge of finance and financial markets. It answers the main questions of a corporate entity, such as how businesses finance their activities, how they select projects to invest in, the distribution of net cash flow and, of increasing importance, how businesses manage price risk relating to cost of goods sold or a decline in revenue. In providing invaluable guidance to finance, management and business students, Essentials of Financial Management employs two main philosophies: that finance is a real-life subject and that finance is a numerical subject, which is why this brilliant e-textbook contains real world examples as well as numerous Excel spreadsheet solutions for students to download and use.
More details
Language
English
Place of publication
Liverpool
United Kingdom
Target group
College/higher education
Dimensions
Height: 234 mm
Width: 156 mm
ISBN-13
978-1-78694-205-0 (9781786942050)
Copyright in bibliographic data and cover images is held by Nielsen Book Services Limited or by the publishers or by their respective licensors: all rights reserved.
Schweitzer Classification
Person
Jason Laws has over 20 years of experience in teaching finance at undergraduate, postgraduate, MBA and professional level and is currently Senior Lecturer in Corporate Finance at the University of Liverpool. Jason joined the University of Liverpool Management School in July 2011 having previously worked at Liverpool John Moores University, University of London, University of Leicester, SOAS, Singapore Institute of Management and University of Glasgow.
Content
Introduction
1 An Introduction to equity markets
1.1 The benefits of a smooth-running stock exchange
1.2 The efficient market hypothesis
1.3 Ordinary shares
1.4 Preference shares
1.5 Authorised, issued and par values
1.6 An initial public offering
1.7 Stock market indices
1.8 Stock market linkages
1.9 Rights issues
1.10 Stock splits
1.11 Share repurpose
2 Risk versus return
2.1 A primer on the variance of an asset and covariance of a pair of assets
2.2 The mean and variance of a portfolio
2.3 Finding the risk of a three- or more asset portfolio
2.4 Choosing the optimal portfolio
2.5 The risk of large portfolios
2.6 Market risk
2.7 The capital asset pricing model
2.8 The beta of a portfolio
3 The time value of money, the dividend discount model and dividend policy
3.1 The time value of money
3.2 Present values
3.3 Perpetuities and annuities
3.4 Dividend discount model
3.5 The Gordon growth model
3.6 Two-period dividend growth model
3.7 Example with earnings growth
3.8 Real-life dividend policy
4 The valuation of bonds
4.1 Introduction to bonds
4.2 Bond pricing
4.3 The price yield curve
4.4 The risk of default
4.5 Does the yield to maturity change?
4.6 Bond duration
4.7 Characteristics of duration
4.8 Relationship between bond prices and duration
4.9 Bond convexity
5 Investment appraisal
5.1 Introduction to investment appraisal
5.2 The net present value decision rule
5.3 The relationship between NPV and discount rate
5.4 The internal rate of return
5.5 Pitfalls with using the internal rate of return
5.6 The crossover rate
5.7 Payback
6 The weighted average cost of capital
6.1 Determining the appropriate cost of capital
6.2 The cost of debt capital
6.3 The weighted average cost of capital
6.4 Bringing this all together
7 Foreign exchange risk
7.1 Exchange-rate risk and exchange-rate regimes
7.2 How big is the foreign exchange market
7.3 Spot and forward markets and currency quotations
8 An introduction to futures trading and hedging using futures
8.1 Introduction to futures
8.2 Futures positions
8.3 Delivery
8.4 Minimum performance bond requirements
8.5 Hedging with futures contracts
8.6 Basis
8.7 Hedge efficiency
8.8 Airlines hedging price risk
9 Introduction to options
9.1 Option terminology
9.2 Option strategies
9.3 Long call purchase
9.4 Naked call write
9.5 Long put purchase
9.6 Naked put write
9.7 Long and short straddle strategies
9.8 The Black-Scholes option pricing model
9.9 FX options as foreign currency insurance
Solution to activities
Bibliography
1 An Introduction to equity markets
1.1 The benefits of a smooth-running stock exchange
1.2 The efficient market hypothesis
1.3 Ordinary shares
1.4 Preference shares
1.5 Authorised, issued and par values
1.6 An initial public offering
1.7 Stock market indices
1.8 Stock market linkages
1.9 Rights issues
1.10 Stock splits
1.11 Share repurpose
2 Risk versus return
2.1 A primer on the variance of an asset and covariance of a pair of assets
2.2 The mean and variance of a portfolio
2.3 Finding the risk of a three- or more asset portfolio
2.4 Choosing the optimal portfolio
2.5 The risk of large portfolios
2.6 Market risk
2.7 The capital asset pricing model
2.8 The beta of a portfolio
3 The time value of money, the dividend discount model and dividend policy
3.1 The time value of money
3.2 Present values
3.3 Perpetuities and annuities
3.4 Dividend discount model
3.5 The Gordon growth model
3.6 Two-period dividend growth model
3.7 Example with earnings growth
3.8 Real-life dividend policy
4 The valuation of bonds
4.1 Introduction to bonds
4.2 Bond pricing
4.3 The price yield curve
4.4 The risk of default
4.5 Does the yield to maturity change?
4.6 Bond duration
4.7 Characteristics of duration
4.8 Relationship between bond prices and duration
4.9 Bond convexity
5 Investment appraisal
5.1 Introduction to investment appraisal
5.2 The net present value decision rule
5.3 The relationship between NPV and discount rate
5.4 The internal rate of return
5.5 Pitfalls with using the internal rate of return
5.6 The crossover rate
5.7 Payback
6 The weighted average cost of capital
6.1 Determining the appropriate cost of capital
6.2 The cost of debt capital
6.3 The weighted average cost of capital
6.4 Bringing this all together
7 Foreign exchange risk
7.1 Exchange-rate risk and exchange-rate regimes
7.2 How big is the foreign exchange market
7.3 Spot and forward markets and currency quotations
8 An introduction to futures trading and hedging using futures
8.1 Introduction to futures
8.2 Futures positions
8.3 Delivery
8.4 Minimum performance bond requirements
8.5 Hedging with futures contracts
8.6 Basis
8.7 Hedge efficiency
8.8 Airlines hedging price risk
9 Introduction to options
9.1 Option terminology
9.2 Option strategies
9.3 Long call purchase
9.4 Naked call write
9.5 Long put purchase
9.6 Naked put write
9.7 Long and short straddle strategies
9.8 The Black-Scholes option pricing model
9.9 FX options as foreign currency insurance
Solution to activities
Bibliography