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Table of Contents
- CHAPTER
- GOALS AND GOVERNANCE OF THE FIRM
- 1.1 Finance / Financial market:
- 1.2 Organizational structure of a corporation:
- 1.3 Sole proprietorship:
- 1.4 Limited partnership vs General partnership:
- 1.5 Goals of the firm:
- 1.6 Agency problems:
- 1.7 Real assets vs financial assets:
- 1.8 Investing decisions vs Financing decisions:
- 1.9 Tangible assets vs Intangible assets:
- 1.10 Capital structure:
- 1.11 Stakeholders:
- CHAPTER
- HOW TO CALCULATE PRESENT VALUE?
- 2.1 LÝ THUYẾT:
- 2.2 Dạng bài “Single payment cashflow” – Chỉ có 𝑪𝟎 và 𝑪𝒏
- 2.3 Dạng bài “Multiple payment cashflows” – Có 𝑪𝟎 , 𝑪𝟏 , 𝑪𝟐 , …., 𝑪𝒏.........................
- 2.4 Dạng bài “Net present value”:
- 2.5 Dạng bài “Annuity”
- 2.6 Dạng bài “Perpetuity”
- 2.7 Dạng bài “Growth Annuity”
- 2.8 Dạng bài “Growth Perpetuity”
- 2.9 Dạng bài “Discount Factor”
- 2.10 Dạng APR (Annual Percentage Rate)
- 2.11 Dạng EAR
- CHAPTER
- VALUING BONDS
- LÝ THUYẾT:
- 3.1 Dạng bài tính “Price” của bond:
- 3.2 Dạng bài tính “Coupon payment” của bond:
- 3.3 Dạng bài tính “Coupon rate” của bond:
- 3.4 Dạng bài tính “YTM” của bond:
- 3.5 Dạng bài tính “Duration” của bond:
- 3.6 Dạng bài tính “Volatility” của bond:
- CHAPTER
- THE VALUE OF COMMON STOCKS
- LÝ THUYẾT:
- 4.1 Dạng bài tính “Market Capitalization”:
- 4.2 Dạng bài tính “P/E, EPS”:
- 4.3 Dạng bài tính “dividend payout ratio” vs “plowback ratio”:
- 4.4 Dạng bài tính “Price” của stock:
- 4.5 Dạng bài tính “Rate of return” (r%):
- 4.6 Dạng bài tính “dividend growth rate” (g%):
- 4.7 Dạng bài tính “Dividend in year n”:
- CHAPTER
- INTRODUCTION TO RISK AND RETURN
- LÝ THUYẾT:
- 5.1 Dạng bài 1 stock, n year
- 5.2 Dạng bài 1 stock, in different economy
- 5.3 Dạng bài tính Covariance, Correlation coefficient, n year
- 5.4 Dạng bài tính Covariance, Correlation coefficient, in different economies
- 5.5 Dạng bài tính “Portfolio weight”
- 5.6 Dạng bài 1 portfolio including 2 stocks
- 5.7 Dạng bài tính Beta of a stock
- 5.8 Dạng bài tính “Market risk premium”
- CHAPTER
- PORTFOLIO THEORY AND THE CAPM
- Key terms cần nhớ:
- 6.1 Dạng bài “Investment decision”:
- 6.2 Expected return of a single stock with data of beta, rf, rm – rf
- 6.3 Beta of a portfolio
- CHAPTER
- RISK AND THE COST OF CAPITAL
- Key terms cần nhớ:
- 7.1 Market risk premium
- 7.2 Expected rate of return / Expected rate of return / Discount rate, CAPM
- 7.3 Cost of capital
- 7.4 WACC
- 7.5 WACC and NPV
- 7.6 Certainty equivalent cash flow
- CHAPTER
- FINANCIAL ANALYSIS...........................................................................................................
- Key terms cần nhớ:
- Financial statements
- Income of a company
- 8.1 Measuring performance
- 8.2 Measuring Profitability
- 8.3 Measuring Efficiency
- 8.4 Measuring Leverage
- 8.5 Measuring Liquidity:
- 8.6 Measuring Investment
- 8.7 Dạng tổng hợp
- CHAPTER
- WORKING CAPITAL MANAGEMENT
- Key terms cần nhớ:
- 9.1 Inventory Management
- 9.2 Receivables Management
- 9.3 Payables Management
- 9.4 Cash Management
- CHAPTER
- FINANCIAL PLANNING..........................................................................................................
- Key terms cần nhớ:
- 10.1 Sources of cash
- 10.2 Uses of cash
- 10.3 Cash budgeting
- CHAPTER
- PAYOUT POLICY
- Key terms cần nhớ:
- 11.1 Dạng Stock price
- 11.2 Dạng Value of dividend
- 11.3 Dạng Stock outstanding / Split stocks
CHAPTER 1
GOALS AND GOVERNANCE OF THE FIRM
Chiến lược làm bài tổng quát:
- Nhận dạng từ khóa
- Loại trừ đáp án sai từ trên xuống dưới
- Target: Làm 1 câu trong vòng 20 giây
1.1 Finance / Financial market:
- Finance, generally, deals with: I) Money; II) Markets; III) People.
- Functions of financial markets: I) Source of financing; II) Provide liquidity; III) Reduce risk;
IV) Source of information.
1.2 Organizational structure of a corporation:
- Generally, a corporation is owned by the shareholders.
- Shareholders of a corporation could be: I) Individuals; II) Pension Funds; III) Insurance
Companies.
- Corporations, potentially, have infinite life because of the separation of ownership and
management. Limited liability is an important feature of corporations.
- Organizational structure of a corporation: The chief executive officer (CEO), chief financial
officer (CFO) report to the board of directors.
- Managers' actions are monitored by the board of directors, Commercial banks that have loaned
funds to the firm, The Wall Street analysts.
- Common function of the firm's chief financial officer (CFO): Hiring controller, hiring
treasurer, investing capital, paying dividends. The Chief Financial Officer (CFO) of a
corporation oversees: Treasurer's functions & Controller's functions.
- The treasurer and the controller of a corporation generally report to the CFO. The key
difference between the duties of the controller and those of the treasurer is the separation of
cash control from accounting records.
- Treasurer: directly responsible for financial planning and capital expenditures. The treasurer is
usually responsible the following functions of a corporation: Investor relationships, Cash
management, raising new capital.
- Controller usually oversees the following functions of a corporation: Preparation of financial
statements, Internal accounting, Taxes.
- Agency costs are incurred by a corporation because:
- managers may not attempt to maximize the value of the firm to shareholders
- shareholders incur monitoring cost
- separation of ownership and management
- If the corporation is not performing well, shareholders can:
- Replace the board of directors in an election
- Force the board of directors to change the management team
- Sell their shares of stock in the corporation
1.7 Real assets vs financial assets:
- Real assets: Machinery, Office buildings, Warehouse.
- Financial assets: Common stock, Bank loan, Preferred stock.
1.8 Investing decisions vs Financing decisions:
- Investment decision / capital budgeting decision: The purchase of real assets; Deciding
whether or not to open a new store. A firm's investment decision is also called the capital
budgeting decision – The process of planning and managing a firm's long-term investments.
- Financing decision: The sale of financial assets.
1.9 Tangible assets vs Intangible assets:
- Tangible assets: Machinery; Office buildings; Warehouse; Factories; Offices.
- Intangible assets: Trademarks; Patents; Technical expertise.
1.10 Capital structure:
- Capital structure refers to decisions related to long-term debt and equity financing.
- The mixture of debt and equity, used to finance a corporation is also known as Capital structure.
1.11 Stakeholders:
- A stakeholder is any person or entity other than a stockholder or creditor who potentially has
a claim on the cash flows of a firm. Example: Employee, Customer; Community; Supplier.
- The following groups are some of the claimants to a firm's income stream: I) Shareholders; II)
Bondholders; III) Employees; IV) Management and V) Government.
CHAPTER 2
HOW TO CALCULATE PRESENT VALUE?
Chiến lược làm bài tổng quát
- Phân tích đề thuộc dạng nào
- Viết công thức ra nháp + Áp dụng công thức chính xác
- Làm bài chỉ cần bước thế số và ra đáp án.
- Dùng dấu “,” cho phần ngàn, dấu “.” cho phần thập phân.
- Làm tròn 2 số sau phần thập phân
- Target: Làm 1 câu trong vòng 20 giây
2.1 LÝ THUYẾT:
- Present Value is defined as future cash flows discounted to the present at an appropriate
discount rate
- If the present value of the cash flow X is $240, and the present value cash flow Y $160,
then the present value of the combined cash flow is:
- The rate of return is also called: I) discount rate; II) hurdle rate; III) opportunity cost of
capital.
- The present value formula for one period cash flow is: PV = C1/(1 + r)
- An annuity is defined as equal cash flows at equal intervals of time for a specified period
of time
- Example of annuity: If you receive $1,000 payment at the end each year for the next five
years
- You are considering investing in a retirement fund that requires you to deposit $5,000 per
year, and you want to know how much the fund will be worth when you retire. What
financial technique should you use to calculate this value?
Future value of an annuity
- According to the net present value rule, an investment in a project should be made if the
Net present value is positive.
- NPV rule and the rate of return rule: Accept a project if its NPV > 0, Reject a project if the
NPV < 0, Accept a project if its rate of return > opportunity cost of capital
- Ms. Nhu is looking to invest some money, so that she has $55,000 at the end of three years.
Which investment should she make given the following choices:
a) 8.2% compounded daily
b) 8.9% compounded monthly
c) 9.2% compounded quarterly
- Find the future value of an investment of $22,500 made today for the following rates and
periods:
a) 6.25% compounded semiannually for 12 years
b) 7.63% compounded quarterly for 6 years
c) 8.9% compounded monthly for 10 years
d) 10% compounded daily for 3 years
- Ms. Nhu needs to decide whether to accept a bonus of $1,820 today or wait two years and
receive $2,100 then. She can invest at 16 percent. What should she do?
- Ms. Nhu saves $70,250 and she needs some money at the end of five years. Which investment
should she make given the following choices:
a) 16.25% compounded quarterly
b) 16.5% compounded semi-annually
- You have won a prize of 52 million VNĐ to be paid exactly after 3 years. You were offered
45 million VNĐ today as a consideration for his agreement to sell the right to receive the prize.
The market interest rate is 12% and the interest is compounded on quarterly basis. Whether the
offer should be accepted or not?
2.3 Dạng bài “Multiple payment cashflows” – Có 𝑪
𝟎
𝟏
𝟐
𝒏
Chiến lược làm bài:
- Nhận dạng câu hỏi có following cash flows (dòng tiền cho từng năm)
- Dùng công thức:
1
1
2
2
𝑛
𝑛
𝑖
𝑛
𝑖= 1
𝑛
0
× ( 1 + 𝑟)
𝑛
1
× ( 1 + 𝑟)
𝑛− 1
𝑛− 1
× ( 1 + 𝑟) + 𝐶
𝑛
𝑛
= ∑ 𝐶(𝑖) × ( 1 + 𝑟)
𝑛−𝑖
𝑛
𝑖= 0
- What is the present value of the following cash flow at a discount rate of 12%?
Year 1 Year 2 Year 3
- At an interest rate of 10%, which of the following cash flows has highest present value?
Option Year 1 Year 2 Year 3
A 500 300 100
B 100 300 500
C 300 300 300
- What is the present value of the following cash flow at a discount rate of 9%?
Year 1 2
CF ($) - 100,000 300,
- A project is expected to produce cash flows of $6,000, $8,000, and $9,000 over the next three
years, respectively. After three years, the project will be discontinued. What is this project
worth today at a discount rate of 20 percent?
- What is the future value of the following cash flow at the end of five years with the discount
rate of 10%?
Year 0 1 2 3 4 5
CF $250,000 0 $120,000 $80,000 $50,000 $25,
2.4 Dạng bài “Net present value”:
Chiến lược làm bài:
- Nhận dạng câu hỏi có kêu tính NPV của dự án.
- Vận dụng NPV rule: chấp nhận dự án khi NPV > 0, từ chối dự án khi NPV âm.
- Dùng công thức:
0
1
1
2
2
𝑛
𝑛
0
𝑖
𝑛
𝑖= 1
Year Net Cash Flows ($)
Assume that the cost of capital is 10%. What is the net present value? Should VinGroup accept
this project? Why?
- What is the net present value of the following cash flow at a discount rate of 12%?
Year 0 1 2 3 4 5
CF - 120,000 35,000 35,000 35,000 35,000 - 10,
2.5 Dạng bài “Annuity”
Chiến lược làm bài:
- Nhận dạng câu hỏi có từ “annuity”: đều hàng năm, xác định được số năm đều
- 1 số ví dụ khác về annuity:
- Sau khi về hưu, mỗi năm sẽ nhận 75,000$ trong vòng 25 năm.
- Mỗi năm trả nợ với 1 khoản tiền bằng nhau, trong vòng 20 năm.
- Mỗi năm đóng tiền học là 12,500$ trong vòng 6 năm.
- Cho thuê xe trong vòng 5 năm, mỗi tháng nhận được $250.
- Nhà máy hoạt động tạo ra dòng tiền đều $150,000 mỗi năm, trong vòng 8 năm.
- Lưu ý: Dòng tiền đều bắt đầu phát sinh từ lúc nào. Nếu là cuối năm 1 thì dùng công thức
tính PV bình thường. Nếu là đầu năm 1 (today) thì dùng công thức là đang tính C(-1),
rồi nhân lại cho (1+r) để ra PV.
= 𝐶 × [
−𝑛×𝑚
]
𝑃𝑉𝐴 (𝑑𝑢𝑒) = 𝐶 × [
−𝑛×𝑚
] × ( 1 +
𝐹𝑉𝐴 (𝑜𝑟𝑑𝑖𝑛𝑎𝑟𝑦) = 𝐶 × [
𝑛×𝑚
]
𝐹𝑉𝐴 (𝑑𝑢𝑒) = 𝐶 × [
𝑛×𝑚
] × ( 1 +
- What is the present value of $1000 per year annuity for five years at an interest rate of 12%?
- What is the present value of $1000 per year annuity at a discount rate of 12% for 8 years?
- What is the present value of $5000 per year annuity at a discount rate of 10% for 6 years?
- After retirement, you expect to live for 25 years. You would like to have $75,000 income each
year. How much should you have saved in the retirement to receive this income, if the interest
is 9% per year (assume that the payments start one year after the retirement )?
- After retirement, you expect to live for 25 years. You would like to have $75,000 income each
year. How much should you have saved in the retirement to receive this income, if the interest
is 9% per year (assume that the payments start on the day of retirement )?
- Mr. Trump is expected to retire in 25 years and he wishes accumulate $750,000 in his
retirement fund by that time. If the interest rate is 10% per year, how much should Mr. Trump
into the retirement fund each year in order to achieve this goal? Assume that the payments are
made at the end of each year.
- After retirement, you expect to live for 20 years. You would like to have $7,000 income each
year. How much should you have saved in the retirement to receive this income, if the interest
is 10% per year (assume that the payments start on the day of retirement )?
- After retirement, you would like to have $80,000 income each year for 20 years. How much
should you have saved in the retirement to receive this income, if the interest is 3.0% per year
(Assume that the payments start one year after the retirement )
- Mr. Trump is expected to retire in 30 years and he wishes accumulate $1,000,000 in his
retirement fund by that time. If the interest rate is 12% per year, how much should Mr. Trump
put into the retirement fund each year in order to achieve this goal?
- Mr. Trump expects to retire in 30 years and would like to accumulate $1 million in the pension
fund. If the annual interest rate is 12% per year, how much should Mr. Trump put into the
pension fund each month in order to achieve his goal? Assume that Mr. Trump will deposit the
same amount each month into his pension fund and also use monthly compounding.
- Nhận dạng câu hỏi có từ “perpetuity”
- 1 số ví dụ khác về perpetuity:
- Sau khi về hưu, mỗi năm sẽ nhận 80,000$ cho đến vĩnh viễn.
- Trong thực tế, trái phiếu consols của Anh, là có trả trái tức (coupon) đều cho
đến vĩnh viễn.
- Lưu ý: Dòng tiền đều vĩnh viên bắt đầu phát sinh từ lúc nào. Nếu là cuối năm 1 thì dùng
công thức tính C0 bình thường. Nếu là đầu năm 1 (today) thì dùng công thức là đang
tính C(-1), rồi nhân lại cho (1+r) để ra C0. Nếu là cuối năm 4 thì dung công thức để tính
C3, rồi chiết khấu 3 năm về để tính C0.
0
1
- What is the present value of $10,000 per year perpetuity at an interest rate of 10%?
- You would like to have enough money saved to receive $80,000 per year perpetuity after
retirement so that you and your family can lead a good life. How much would you need to save
in your retirement fund to achieve this goal (assume that the perpetuity payments start one year
from the date of your retirement. The interest rate is 8%)?
- You would like to have enough money saved to receive $100,000 per year perpetuity after
retirement so that you and your family can lead a good life. How much would you need to save
in your retirement fund to achieve this goal (assume that the perpetuity payments start one year
from the date of your retirement. The interest rate is 12.5%)?
- You would like to have enough money saved to receive a $50,000 per year perpetuity after
retirement so that you and your family can lead a good life. How much would you need to save
in your retirement fund to achieve this goal (assume that the perpetuity payments start on the
day of retirement. The interest rate is 8%)?
- You would like to have enough money saved to receive an $80,000 per year perpetuity after
retirement so that you and your family can lead a good life. How much would you need to save
in your retirement fund to achieve this goal (assume that the perpetuity payments start on the
day of retirement. The interest rate is 10%)?
- What is the present value of cash flows of $5,000 start at the end of year 4 in perpetuity?
Assuming a rate of return of 10%?
- Calculate the present value of cash flows of $9,500 start at the end of year 5 in perpetuity.
Assuming a rate of return of 8.25%?
2.7 Dạng bài “Growth Annuity”
Chiến lược làm bài:
- Nhận dạng câu hỏi có từ “growing annuity”
- 1 số ví dụ khác về growing annuity:
- Sau khi về hưu, năm đầu nhận đc 60,000$, các năm sau mỗi năm số tiền nhận
được tăng trưởng với tốc độ g = 4%, nhận tiền như vậy trong vòng 25 năm.
0
1
× [ 1 − (
𝑛
]
𝑛
1
×
𝑛
𝑛
- You would like to have enough money saved to receive a growing annuity for 25 years,
growing at a rate of 4% per year, the first payment being $60,000 after retirement, so that you
and your family can lead a good life. How much would you need to save in your retirement
fund to achieve this goal? (Assume that the growing annuity payments start one year from the
date of your retirement. The interest rate is 12%)?
- You would like to have enough money saved to receive a growing annuity for 20 years,
growing at a rate of 5% per year, the first payment being $50,000 after retirement. That way,
you hope that you and your family can lead a good life after retirement. How much would you
need to save in your retirement fund to achieve this goal. (Assume that the growing annuity
payments start one year from the date of your retirement. The interest rate is 10%)?
2.8 Dạng bài “Growth Perpetuity”
Chiến lược làm bài:
- Nhận dạng câu hỏi có từ “perpetuity” và có cho growth rate (g%)
- 1 số ví dụ khác về growing perpetuity:
- Cuối năm 1 nhận đc 1,000$, cuối các năm kế tiếp nhận được số tiền tăng trưởng
với tốc độ tăng trưởng g%, cho đến vĩnh viễn.
- Cuối năm 4 nhận được 5,000$, cuối năm thứ 5 cho đến vĩnh viễn, mỗi năm số
tiền nhận được tăng trưởng với tốc độ g%.
- If the present value of $600 expected to be received one year from today is $400, what is the
one-year discount rate?
- What is the present value annuity factor at a discount rate of 11% for 8 years?
- What is the present value annuity factor at an interest rate of 9% for 6 years?
- If the present value annuity factor at 8% APR for 10 years is 6.71, what is the equivalent future
value annuity factor?
2.10 Dạng APR (Annual Percentage Rate)
Chiến lược làm bài:
- Nhận dạng bài cho APR
- Xem kêu tính FV bằng tính lãi suất đơn hay lãi suất kép (lãi chồng lại)
- Nếu apply lãi suất đơn thì:
𝑛
= 𝑃𝑉 ×
1 + 𝐴𝑃𝑅 × 𝑛
- Nếu apply lãi suất kép thì:
𝑛
= 𝑃𝑉 × ( 1 + 𝐴𝑃𝑅)
𝑛
- If you invest $100 at 12% APR for three years, how much would you have at the end of 3 years
using simple interest?
- If you invest $100 at 12% APR for three years, how much would you have at the end of 3 years
using compound interest?
2.11 Dạng EAR
Chiến lược làm bài:
- Nhận dạng bài:
- Cho EAR, kêu tính Nominal rate:
𝑁𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒 = [( 1 + 𝐸𝐴𝑅)
1
𝑚 − 1 ] × 𝑚
- Cho Nominal rate compounded m, kêu tính EAR:
𝑚
- Cho Nominal rate compounded continuously, kêu tính EAR:
𝑛𝑜𝑚𝑖𝑛𝑎𝑙 𝑟𝑎𝑡𝑒
- Cho Nominal rate per m (VD: 1% / tháng), kêu tính APR: Nominal rate × m
- An investment at 10.47% effective rate compounded monthly is equal to a nominal (annual)
rate of:
Nominal rate = [(1.1047)^(1/12) - 1] * 12 = 0.1 = 10%
- An investment at 12% nominal rate compounded monthly is equal to an annual rate of:
- An investment at 10% nominal rate compounded continuously is equal to an equivalent annual
rate of:
(e^(0.1)) - 1 = 0.10517 = 10.517%
- Given a monthly rate of 1%, what is the Effective Annual Rate (EAR)? What is the Annual
Percentage Rate (APR)?
EAR = (1+1%)^12 – 1 = 12.68%
APR = 1%*12 = 12%
