POF final examination revision (catalogue) PDF

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It is a catalogue that covers all topics in order. It is convenient if you want to find relevant topics and lectures more quickly....

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Lec 1 + 2 Three important concepts 1. time value of money and int rate 2. role of info and capital market efficiency 3. riskless arbitrage and the law of one price 4. firm value maximization Simple & compounded int PV, FV Valuing a series of cash flows Perpetuity Ordinary Annuity Lec 3 EAR Loan payment and principle outstanding Terms Debt securities 1. the valuation principle 2. Short & long term debts 3. Bond price Lec 4 Dividend discount model -general dividend discount model -constant dividend growth model Growth rate and payout ratio *Preference shares The variable dividend growth model P/E ratio and PVGO Lec 5 Measuring risk & returns -Returns on financial assets -Arithmetic & Geometric returns -Rank the securities (from most risky) The probability distribution approach

1. Two key assumptions 2. Expected Return 3. Covariance & Correlation 4. Variance & Standard deviation Risk-Return tradeoffs – Diversification 1. Portfolio risk and returns : 2 securities Key knowledge 1. As a portfolio becomes large in size, its total risk (sd) falls, but at a declining rate. Leverage & Short Selling 1. Sharp ratio 2. Leveraging 3. Short selling Lec 7 The Efficient Frontier and The Capital Market Line (CML) 1. Main assumption 2. Expected return of an asset/a portfolio 3. The Efficient Frontier 4. The Market Portfolio 5. CML 6. Expected return of an efficient portfolio The Capital Asset Pricing Model (CAPM) and Beta 1. CAPM 2. CAPM’s institution 3. Beta & SML 4. Beta of a two-securities portfolio 5. Compare CML and SML 6. The Market Model 7. Sharp ratio, Treynor Ratio, and Jensen’s Alpha Lec 8 Capital budgeting NPV 1. The NPV method 2. Decision rule 3. Example 4. The NPV profile Internal Rate of Return (IRR) 1. IRR & decision rule 2. problems with IRR

Comparing NPV and IRR 1. The incremental IRR 2. problems with the incremental IRR The Profitability Index 1. Caveat for independent projects 2. Profitability index 3. Limitations Payback period Lec 9 Incremental Net a-tax cash flows 1. financing charges, sunk costs, fixed overhead costs 2. calculation -taxes and tax effects -free cashflows Net working capital (NWC) Take inflation & tax into account 1. the consistency principle Projects with different lives 1. the constant chain of replacement assumption 2. the perpetuity method 3. equivalent annuity value (EAV) 4. example WACC 1. calculation 2. main steps to estimate EACC 3. limitation

Lec 10 Two main risks 1. Business/operational risk 2. Financial risk 3. Financial leverage 4. Source of capital (排行 rank) MM Proposition 1. financial leverage 2. observations 3. Breakeven EBIT

MM Proposition (with tax) 1. MM and market imperfections 2. Interest tax shield Lec11 Payout policies 1. ways to payout 2. dividends – 4 key dates 3. dividend payout policy MM and Dividend Irrelevance theory 1. Main assumptions 2. homemade dividend 3. conclusion Taxes and other market imperfections 1. classical tax system 2. imputation tax system 3. dividend signaling hypothesis *bonus share Share split Share buy-back Lec 12 Options 1. type of options Factors affecting call & put option prices 2. Hedging with options...