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Web Casts: Corporate Finance (Undergraduate) - Spring 2016

 


The 28-session corporate finance class will be webcast starting January 25, 2016, and the lectures will be available as webcasts that can either be watched online or downloaded. You can get the supporting lecture notes by clicking on the pdf files below - the pages covered by each lecture are provided next to each lecture. The quality of the video is not great but the audio should be good. You can download the lecture notes that I will be using for the classes below. For the syllabus and other details, visit the home page for this class .
Lecture note packet 1: Management Objectives and Investment Analysis (Sessions 1-15): The link is to a pdf file which is good for tablets or iPads. If you want to print the file, download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. Updated for Spring 2016 class.
Lecture note packet 2: Capital Structure, Dividend Policy and Valuation (Sessions 16-26): The link is to a pdf file which is good for tablets or iPads. If you want to print the file. download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. Updated for Spring 2016 class.
Webcasts
This page will include the webcasts from the current class. This page will include the webcasts from the current class. The webcasts can be accessed in one of four ways:

  1. Streaming video (The file will be streamed to your computer. This will work only if you have a good internet connection, but should be of the best quality)
  2. Video podcast (The .m4v file will be downloaded to your computer and you can watch the video using Quicktime or video software or on your iPod)
  3. Audio podcast (The .mp3 file will be downloaded as an audio file and can be played on any audio player)
  4. YouTube videos (if you have slower internet connection and/or a small device).

Options for following class

You can follow this class in other forums. One is YouTube, where I have created a playlist for the class. The other is iTunes U, where you can watch the webcasts and follow the class on your tablet or even smartphone.

  1. YouTube: If you want to see the YouTube playlist, here is the link.
  2. Apple iTunes U: If you would like to watch the sessions on Apple iTunes U on your Apple device, try this link.

Finally, you can read the emails that I send to the class by this link,as well as the newsletters for the class.

Session (Click here) Topics covered Lecture notes

1 (1/25/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video
This is corporate finance!
Overview of class
  1. Syllabus for class
Post-class test and solution
Corporate Finance Puzzle #1

The Corporate Life Cycle

  1. Aging in Dog Years: The Short Glorious Life of a Tech Company
  2. The Compressed Life Cycle of Tech Companies: Managerial Challenges
  3. Microsoft - Historical Data

The set up & questions

2 (1/27/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video
The last themes in corporate finance
The Project
The objective in running a business
- Value maximization versus Stock price maximization
- The "utopian" world of price maximization

  1. Project Description
  2. Lecture Note Packet: 1-6
Post-class test and solution
In Practice Webcast #1
Collecting Data
  1. Webcast
  2. SEC website
  3. SEC Live
  4. FRED (Federal Reserve)

3 (2/1/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

The real world intrudes
-Stockholder vs Managerial Interests
- The essence of corporate governance

  1. Packet 1: 7-28
  2. The Theranos Board
Post-class test and solution
Corporate Finance Puzzle #2

Price versus Value

  1. Laurence Fink's letter to S&P 500 Companies
  2. My blog post on price versus value (from 2013)
  3. A short article on the value/price objective
  4. A YouTube video on the topic

The set up & questions

4 (2/3/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

More on the objective function
- Lenders versus Stockholders
- Incomplete information & irrational markets
- Alternatives to stock price maximization

Packet 1: 29-60
Post-class test and solution
In Practice Webcast #2
Assessing corporate governance Webcast
Presentation
HP Annual Report
HP DEF14A

5 (2/8/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

 

Risk and Return
- Defining Risk
- The CAPM
- Alternatives to the CAPM
Packet 1: 61-87
Post-class test and solution
Corporate Finance Puzzle #3

To diversify or not to diversify?

  1. The Case for Diversification (Markowitz)
  2. The Case for Concentration
  3. The Behavioral Evidence on Investor Behavior

The set up & questions

6 (2/10/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video


The Risk free Rate
Equity Risk Premiums
- The basis
- Estimation procedures
- Historical ERP
  1. Packet 1: 88-106
Post-class test and solution
In Practice Webcast #3
Analyzing the stockholder base
  1. Webcast
  2. Presentation
  3. Activist Investing Newsletter
  4. An updated listing of activist investors
In Practice Webcast #4
Estimating a Risk free rate
  1. Webcast
  2. Presentation
  3. Moody's ratings (3/13)
  4. CDS spreads (3/13)
Corporate Finance Puzzle #4

How risk averse are you?

  1. As stocks gyrate, it is time to measure your risk tolerance.
  2. Measuring your risk aversion

The set up & questions

7 (2/17/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video


Equity Risk Premiums
- The basis
- Estimation procedures
- Historical versus Implied Premiums
- Country risk premiums
- Company ERP
First Steps on Beta

Packet 1: 107-123
Post-class test and solution
In Practice Webcast #4a
Estimate a company's equity risk premium
  1. Webcast
  2. Presentation
  3. ERP & GDP spreadsheet

8 (2/22/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Betas
- Return Regression
- Performance and risk assessment

  1. Packet 1: 124-140
  2. Bloomberg Data Guide
Post-class test and solution
Corporate Finance Puzzle #5

What's in a beta?

  1. Volkswagen's Beta(s)

The set up & questions

9 (2/24/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Determinants of beta
- Nature of products/services
- Operating leverage
- Financial leverage
Betas as weighted averages
- Acquisiton effects on beta
- Introduction to bottom up betas
Packet 1: Pages 141-159
Post-class test and solution
In Practice Webcast #5
Deconstructing a regression beta page
  1. Webcast
  2. Bloomberg beta page
  3. Spreadsheet for analysis
  4. Disney Annual Report (2012)
  5. Excel regression beta page
  6. Disney (Raw Data)
  7. S&P (Raw Data)

10 (2/29/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 


Bottom Up Betas
- Getting pure play betas
- Estimating divisional values
- Betas and costs of equity by business
- Converting costs of equity from one currency to another
- Cost of equity for a privately owned business
Packet 1: Pages 157-172
Post-class test and solution

Quiz 1: Review Session (3/1/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 


Review session for quiz 1
  1. Presentation
  2. Past Quiz 1s
  3. Solutions to past Quiz 1s
Corporate Finance Puzzle #6

Sector Risk

  1. Short term performance of sectors
  2. Long term performance of sectors
The set up & questions

11 (3/2/16)

  1. Webcast, streamed (need a good internet connection) - Skip first 35 minutes
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

 

Take the first quiz (a or b) and check out the solution (a or b)as well as the distribution of grades for the class. (Link for distribution not active yet)

Packet 1: 174-183

Private Business Costs of equity
- Beta estimation
- From market to total betas
Debt
- What is debt?
- Cost of debt

Post-class test and solution
Corporate Finance Case (due March 30 @10.30 am)

Netflix Studio Investment

  1. The Netflix Studio Case (the narrative)
  2. Auto company data (Excel spreadsheet)
  1. Presentation
  2. My solution

Will be posted after 3/30/16)

In Practice Webcast #5a

 

Estimating a bottom up beta
  1. Webcast
  2. United Technologies 10K
  3. Spreadsheet for bottom up beta

12 (3/7/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Cost of Capital (continued)
- Market values for debt and equity
- Lease committments to Debt
- Weights for debt and equity
Introduction to Investment returns
- Earnings vs Cash flows

  1. Yankee infield
  2. Packet 1: 184-210
Post-class test and solution
Corporate Finance Puzzle #7

Sector Risk

  1. Chevron's bet on gas does not pay off
  2. Oil and gas prices from 2009-2016
The set up & questions

13 (3/9/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Measuring investment returns
- Accounting earnings & returns
- Earnings to cash flows
- Incremental cash flows
- NPV and IRR
- Currency Effects
Packet 1: 212-232
Post-class test and solution
In Practice Webcast #6
Debt and the cost of debt

Webcast
Home Depot 10K
Home Depot 10Q
S&P rating for HD
Spreadsheet

14 (3/21/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

 

Dealing with uncertainty
Equity Analysis
To hedge or not to hedge?
Packet 1: 233-263
Post-class test and solution

15 (3/23/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video


Acquisition Valuation
NPV versus IRR
- Multiple IRR
- Different scale
- Reinvestment rate assumptions
Projects with different lives
Side Costs and Side Benefits

Packet 1: 264-303
Post-class test and solution
In Practice Webcast #7
Estimating ROIC and ROE Webcast
Walmart 10K (2013)
Walmart 10K (2012)
Spreadsheet

16 (3/28/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

 

Side Benefits on Projects
Options in projects
Assessing existing projects

Capital Structure
- Debt and Equity
- The Life Cycle view of Debt

  1. Packet 1: 304-End
  2. Packet 2: 1-10
Post-class test and solution
Corporate Finance Puzzle #8

Sunk Costs: Theory and Reality

  1. The sunk cost fallacy
  2. My blog post on the Yankees' A Rod Problem & sunk costs
  1. The set-up and questions

17 (3/30/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

 

The Netflix Studio
- Case Discussion
Debt versus Equity
- The trade off (start)

  1. Netflix Studio
    - Presentation
    - Excel spreadsheet
  2. Packet 2: 11-15
In Practice Webcast #8
A "typical project": what and why?
  1. Presentation
  2. Webcast

Quiz 2: Review Session (4/1/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)



Review session for quiz 2
  1. Presentation
  2. Past Quiz 2s
  3. Solutions to past Quiz 2s

18 (4/4/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Take the second quiz (a or b) and check out the solution (a or b)as well as the distribution of grades for the class. Packet 2: 16-21
The trade off on debt (continued)
- The Added Discipline of Debt
- Expected Bankruptcy Costs
- Agency Costs
Post-class test and solution
Corporate Finance Puzzle #9

The US tax code

  1. Taxes around the world
  2. The Perversity of the US tax code
  3. The Pfizer Allergan Deal
  4. The US Treasury's Bid to stop Inversions
  1. The set-up and questions

19 (4/6/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video
More on the cost of capital approach
- Concerns and Considerations
- Extensions of approach
- Determinants of the optimal
Packet 2: 22-51
Post-class test and solution
In Practice Webcast #9
The trade off on debt versus equity
  1. Presentation
  2. Webcast
  3. Spreadsheet
  4. Marginal tax rates by country
  5. Effective tax rates by sector (US)

20 (4/11/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

More on the cost of capital approach
- Why do it & what if something goes wrong
- Concerns and Considerations
- Extensions of approach

Packet 2: 51-77
Post-class test and solution
Corporate Finance Puzzle #10

The Dark Side of Debt

  1. Valeant: My Blog Post (November 2015)
  2. Valeant spooks bondholders
  3. Valeant's debt rating may be cut
  1. The set-up and questions

21 (4/13/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Reasons why the optimal varies across firms
Adjusted Present Value
Relative capital structure: What and Why?
Following up on the optimal

Packet 2: 78-99

Post-class test and solution
In Practice Webcast #10
The optimal debt ratio
  1. Webcast
  2. Dell 10K
  3. Dell optimal capital structure

22 (4/18/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Moving to the optimal
- Urgency
- Recapitalization versus Projects
Designing the perfect debt
- The basic idea
- Steps in customizing financing
- Approaches

Packet 2: 100-118
Post-class test and solution
Corporate Finance Puzzle #11

Surplus notes: The best of all worlds?
- Surplus notes: What are they?
- The IRS view of surplus notes
- The legal view of surplus notes
- The ratings agency view of surplus notes
- The insurance regulatory view of surplus notes
- The accounting (GAAP) view of surplus notes

  1. The set up and questions

23 (4/20/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video
Designing the perfect financing
- Ways of finding your perfect financing
- Fixing mismatches
Dividend Policy
- Descriptive facts
Packet 2: 119-153
Post-class test and solution
In Practice Webcast #11
The perfect debt
- Intuitive analysis
- Macro regression
  1. Webcast
  2. Presentation
  3. Spreadsheet
  4. WMT financial summary

Quiz 3: Review Session (4/22/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. YouTube video

Review session for quiz 3 Presentation
Past Quiz 3s
Solutions to past Quiz 3s

24 (4/25/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Take the second quiz (a or b) and check out the solution (a or b)as well as the distribution of grades for the class. Packet 2: 154-169
The trade off on debt (continued)
- The Added Discipline of Debt
- Expected Bankruptcy Costs
- Agency Costs
Post-class test and solution

25 (4/27/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video
Designing the perfect financing
- Ways of finding your perfect financing
- Fixing mismatches
Dividend Policy
- Descriptive facts
Packet 2: 170-206
Post-class test and solution
In Practice Webcast #12
The trade off on dividends (whether to pay them and/or increase them)
  1. Webcast
  2. Presentation
In Practice Webcast #13
Dividend Assessment
- Measuring Potential Dividends (FCFE)
- Judging cash return policy
  1. Webcast
  2. Presentation
  3. Spreadsheet
  4. Intel Annual Report
  5. Intel 10-year summary

26 (5/2/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video
Designing the perfect financing
- Ways of finding your perfect financing
- Fixing mismatches
Dividend Policy
- Descriptive facts
Packet 2: 207-237
Post-class test and solution
In Practice Webcast #14
Valuation
- Getting updated numbers
- Valuing a business
- The key drivers of value
  1. Webcast
  2. Spreadsheet
  3. Apple 10K (Sept 2012)
  4. Apple 10Q (Mar 2013)

27 (5/4/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video
Valuation
- Approaches
- Drivers of intrinsic value
- Changing value
Packet 2: 238-258
Post-class test and solution

28 (5/11/15)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio Podcast (downloadable)
  4. YouTube video

 

Closing presentation
- A big picture review
- Project findings
  1. Closing presentation
  2. Project summaries

Final: Review Session (5/10/16)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. YouTube video

Review session for final exam
  1. Presentation
  2. Past finals
  3. Solutions to past finals
Final Exam
Take the final exam and check the solution  
Final Grade
Enter your scores and check your grade in this spreadsheet.