High H1 (97) Principles of Finance Comprehensive Notes!!!

Description

This note summarises all key points you need for your assessments as well as non-examinable contents as an extension. It was written during the 2019 Semester 1 (based on the materials given in this semester) as the subject progressed; some minor corrections were made and explanations added after the final exam. With the help of this note, I got a 100 in my final exam (3 marks was deducted in the mid-semester test). Hope that it can help you get an excellent mark as well! I've summarised lectures according to the correlation of topic. Topics include in this notes are (key points in brackets): 1. Financial Mathematics: Annuities and perpetuities (the time value of money) 2. Debt/Equity securities (bonds and shares): types, interest calculation, pricing 3. Portfolio: risk and return trade-off, portfolio leveraging and short selling 4. Capital Asset Pricing Model (CAPM): types of risk, SML and security’s beta 5. Capital Budgeting 1: using NPV or IRR or Incremental IRR method to evaluate and select projects (advantages and disadvantages of each method) 6. Capital Budgeting 2: incremental cash flow calculation, comparing projects with different lives, cost of capital/equity/debt and WACC 7. Capital Structure 1: sources of finance and risks, Modigliani and Miller's propositions, its real-world implications and imperfections 8. Capital Structure 2: capital structure factors (tax, bankruptcy and agency cost), optimal capital structure and choices of dividend payout policies 9. Options: long call/put and short call/put, options moneyness and factors affecting option prices * The arrangement of order of these topics may change with the subject syllabus.