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Please note: Lecture notes will be available on blackboard before each lecture (including todays notes)
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This Lecture
PART I: INTRODUCTION
Teaching staff Objectives Potential careers targeted with this unit Unit of study outline: contents requirements learning outcomes assessment
Teaching Staff
Name: Dr. Reuben Segara Located: Room 447, Economics & Business Building E-mail: r.segara@econ.usyd.edu.au Consultation time: Monday 3pm-4pm
This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents requirements learning outcomes assessment
This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents requirements learning outcomes assessment
Job Requirements
Analysts Corporate Finance
Company: Location: Remuneration: Position Type: Dresdner Kleinwort Wasserstein UK-London Competitive Employee
We currently have a number of opportunities for analysts to join our Corporate Finance & Origination Department. Job Requirements:
Technical:
Accounting: calculate financial and accounting ratios. Modelling: Use and adapt Merger and DCF Models, ability to build tailor-made models, ability to use and understand non-standard models. Valuation: Demonstrate a thorough understanding and application of the different methods of Valuation techniques. E.g., DCF methodology (incl. WACC calculation), Multiples- trading and transaction Research: Utilise databases such as Bloomberg, Reuters, Datastream, Investec etc. Utilise Internet effectively Legal & Regulatory Knowledge and Principles: demonstrate knowledge of the legal and regulatory issues in a wide range of IB transactions, ability to assist in the preparation of public documentation Procedures: demonstrate a clear understanding of the Compliance and Procedures Manuals, be aware of the range of standard documents and aware of the policy in using them. Be responsible for maintaining transaction files Systems: Demonstrate Advanced Excel skills and effective use of PowerPoint
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Job Requirements
Analysts Corporate Finance
Job Requirements
Teamwork/Leadership:
Demonstrate a high degree of reliability, motivation and enthusiasm Use judgement to seek clarification from superiors
Communication:
Demonstrate clear, confident oral communication Define issues, explain complex concepts succinctly Demonstrate clear and concise drafting skills through input to discrete areas of presentations and other written communication Additional European languages are highly desirable
Motivation:
Demonstrate drive and commitment to results Proactive in seeking learning opportunities
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents requirements learning outcomes assessment
PRESCRIBED TEXTBOOK
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Perdisco e-workbook
An online study resource has been developed for this unit to help you: learn the complex content covered this semester
Its designed to give you the chance to practice, revise and focus on each topic until you completely understand it
Contains interesting (and often humorous) practice questions to help you learn difficult concepts
E-workbook feedback provides step-by-step solutions to help you find out where you went wrong
You also receive an academic discussion explaining how to get the answer correct next time
I really appreciated the prompt feedback. Its like having a tutor there to explain things to you, whereas you cant always make use of consultation hours.
Angela, University of Sydney
The e-workbook has brought up my grades from a Pass to a Distinction with this e-workbook I have a greater ability to excel in my studies.
Adam, ACU
How to register
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Go to www.perdisco.com/students Click Create a new account Follow the instructions on screen Student companion website
http://wps.pearsoned.com.au/au_be_frino_intcorpfin_3/
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
Study Time
How much time do you expect to spend studying for this unit outside of class?
1. 0-3 hours per week 2. 3-6 hours per week 3. 6-9 hours per week 4. More than 9 hours per week
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Study Techniques
The best way to study for this unit will be:
1. Attending lectures and reading the text book. 2. Preparing for the tutorials and answering practice questions 3. Working in groups with other people on various problems 4. Applying what we are learning to the real world 5. All of the above.
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Useful Websites
Australian Stock Exchange www.asx.com.au Australian Financial Review www.afr.com.au Sydney Morning Herald Trading Room www.tradingroom.com.au Egoli www.egoli.com.au
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
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LEARNING OUTCOMES
Personal and Intellectual Autonomy
reflecting on the application of unit of study material to current events.
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LEARNING OUTCOMES
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3. 4.
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LEARNING OUTCOMES
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LEARNING OUTCOMES
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Information Literacy:
Manage, analyse, evaluate and use information to make corporate finance decisions.
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Communication:
Confidently, coherently and concisely communicate orally and in writing, to a professional standard.
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LEARNING OUTCOMES
10.
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
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Tutorial Questions
Workshop questions for each topic are placed in the course outline. Additional questions on the current topic may be placed onto Blackboard. The answers to set workshop questions will be discussed by the class during lectures in the following week. Workshop participation is strongly emphasised for a better learning outcome. Solving the questions before each workshop is compulsory and will help you to take part in the discussion and actively learn and retain knowledge of the course material
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By 4 pm Friday 15 May
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
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Often need to select the best real asset from a range of alternatives Investment decision is also concerned with the purchase of more intangible assets such as patents or shares in another company
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QUESTION
Which of the following is not a corporate finance decision?
1. 2. 3. 4. Increasing the companys dividend Investing in a new factory Hiring a new CFO Issuing new shares
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
Assets that can be put to productive use to generate a return e.g. machinery and equipment
Assets that represent a claim to a series of cash flows against an economic unit
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QUESTION
Identify two financial assets and two real assets that exist in BHP Biliton
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
Common to use the second method, as there is an active secondary market for financial assets, but not necessarily for real assets
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Capital markets
Medium for issuing and exchanging financial assets. For example:
The Australian Securities Exchange (ASX) The Australian government bond market
Real assets
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Investment decision
Capital market
Corporations
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
Valuation involves discounting the claims to a firms cash flows over the time of its life at an appropriate rate of return for the risk associated with those cash flows
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where:
F1 Value ( P0 ) = (1 + r )
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You would be prepared to pay $100 now to receive the certain $110 cash flow a year from now
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Assumption of Certainty
Future cash flows are risky (ie. uncertain) Commonly investors are characterised as risk averse Risk aversion implies that increases in risk require increases in return known as a risk premium. Appropriate discount rate for future cash flows must incorporate risk premium and time value of money.
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Arbitrage
The equilibrium price of a security should equal its value Also, assets of equal risk should have equal prices. In the absence of this condition, arbitrage profits arise. Arbitrage profit is earned by taking no risk and through the use of borrowed funds.
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Rates of return
Definition
This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
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This Lecture
PART I: INTRODUCTION
Teaching competence Objectives Potential careers targeted with this unit Unit of study outline: contents Requirements learning outcomes assessment
Markets Section
You should be able to identify the following:
Price at which stock last traded Number of shares traded Best unexecuted buying & selling prices Bid-ask spread Highest & lowest price over last year Value of S&P/ASX 200
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Markets Section
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The closing value for each index for the previous two days indicates how much it has increased or decreased the previous day
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Whats next?
Week 1 Tutorial problems to be discussed in Lecture 2. Building on these basic concepts:
How to value an asset if there are multiple cashflows in multiple periods Chapter 2 How to apply valuation to stocks & bonds Chapter 3 Apply valuation to real assets to appraise investment projects Chapter 4 An overview of capital markets Chapter 8 & 9
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