Corporate Finance and Derivatives

Overview

Review of financial calculations; Derivation of cash flows from accounting statements; The Cost of Capital and Corporate Valuation Financial Statement Modelling; Introduction to Derivatives; the Binomial Option Pricing Model; The Black Scholes Model; the Greeks; Applications of derivatives in risk management.

Learning Objectives

The course is designed to provide an understanding of the theory of corporate valuation at an intermediate level. The principal models used by practitioners for equity and for assessing corporate investment decisions. The most widely used financial derivative contracts and how they are traded. Basic theory of derivative pricing, with an emphasis on economic intuition not mathematical detail. Some practical applications of derivative pricing in trading and corporate finance.

Skills

1. Extraction, interpretation and assessment of key valuation information from company accounting statements and other investor releases.
2. Building of an equity valuation model.
3. The implementation of standard arbitrage based derivative pricing models.
4. Organising/interpreting/presenting quantitative data.
5. Problem solving.
6. Make intellectually coherent presentations.

Assessment