- Essays Database Online
- Argumentative Essay
- Comparative Essay
- 1200 Word Essay
- IB Extended Essay
- Scholarship Essay
- Discursive Essay
- Research Proposal
- Reaction Paper Writers
- Coursework Writing
- Book Report Writing
- Book Review Writing
- Term Paper Writing
- Write a Case Study
- Case Brief Writing
- Discussion Board Post
- Blog Article Writing
- Article Writing
- Article Review
- Literature Review
- Annotated Bibliography
- Article Critique
- Movie Critique
- Cover Letter Writing
- Motivation Letter Service
- Winning Synopsis
- Marketing Plan
- Business Plan Writing
- Winning White Paper
- Grant Proposal Writing
- Memo Essay Help
- Questions-Answers
- Professional Online Test
- Order Cool Posters Here
- PowerPoint Presentation
- Capstone Project Writing
- Dissertation Writing
- Dissertation Abstract
- Dissertation Literature
- Dissertation Conclusion
- Hypothesis
- Rewriting Services
- Editing Service
- Proofreading Service
- Revise a Paper
- Abstract Help
Finance Principles
Essay specific features
Written by:
Joyce B
Date added:
August 29, 2013
Level:
Grade:
A
No of pages / words:
2 / 459
Was viewed:
637 times
Rating of current essay:
Essay content:
Summary of Finance Principles every MBA Should Know
I) Market values are the only important values in finance; market values are cash values in a sale or purchase; book values are based on historical accounting numbers
II) Wealth is the present value of current and future consumption; cash is the only way you can pay for consumption goods and services
III) The goal of corporate managers should be to maximize shareholders' wealth; positive net present value projects represent increases in wealth; maximizing shareholders' wealth implies finding and investing in positive net-present value projects
IV) Investment decisions should be evaluated in terms of their impact on incremental expected future cash flows
V) Present value analysis discounts expected future cash flows at investors' opportunity costs (the rate of return on alternative investments of equal risk); net present value is the present value of cash flows minus their cost
VI) Expected cash flows are the probability-weighted possible future cash flows; no one knows the future, thus projecting expected future cash flows requires making assumptions concerning future revenues, operating costs, and investments in fixed and working capital
VII) Investors acquire portfolios to diversify the risk of individual assets; relevant risks to diversified investors are the additions to portfolio risk resulting from the inclusion of particular assets in diversified portfolios
VIII) In the CAPM, systematic risk is variations in total market returns affecting all assets; systematic risk is measured by an asset's beta coefficient (reflecting the asset's correlation with the market return) and is the only priced risk; unsystematic risk (uncorrelated with the market) is not priced because that risk can be diversified away and not affect portfolio returns
IX) In efficient markets, all investors are informed and there are no barriers (such as transaction costs or regulations) preventing arbitrage from eliminating any possible profits to be made without investing cash, assuming risk, or both
X) Expected cash flows should be discounted at the appropriate risk-adjusted rate: projects should be discounted at the project-risk rate; equity cash flows should be discounted at the risk-adjusted cost of equity; and debt cash flows from interest and principal payments should be discounted at the risk-adjusted cost of debt
XI) Entity or total firm cash flows or cash flows from investments with average firm risk not requiring changes in financial structure of the firm should be discounted at the weighted-average cost of capital (WACC)
XII) Capital structure differences do not affect the total market value of the firm in efficient markets without taxes; in efficient markets with taxes and no bankruptcy costs, firms should maximize debt (Modigliani-Miller capital structure analysis)
XIII) In efficient markets, dividend policy does not affect the value of the firm because the value of the firm is determined by its investments (Modigliani-Miller dividend analysis)
displayed 300 characters
Custom written essay
All essays are written from scratch by professional writers according to your instructions and delivered to your email on time. Prices start from $10.99/page
Order custom paperFull essays database
You get access to all the essays and can view as many of them as you like for as little as $28.95/month
Buy database accessOrder custom writing paper now!
- Your research paper is written
by certified writers - Your requirements and targets are
always met - You are able to control the progress
of your writing assignment - You get a chance to become an
excellent student!
Get a price guote
Summary of Finance Principles every MBA Should Know
I) Market values are the only important values in finance; market values are cash values in a sale or purchase; book values are based on historical accounting numbers
II) Wealth is the present value of current and future consumption; cash is the only way you can pay for consumption goods and services
III) The goal of corporate managers should be to maximize shareholders' wealth; positive net present value projects represent increases in wealth; maximizing shareholders' wealth implies finding and investing in positive net-present value projects
IV) Investment decisions should be evaluated in terms of their impact on incremental expected future cash flows
V) Present value analysis discounts expected future cash flows at investors' opportunity costs (the rate of return on alternative investments of equal risk); net present value is the present value of cash flows minus their cost
VI) Expected cash flows are the probability-weighted possible future cash flows; no one knows the future, thus projecting expected future cash flows requires making assumptions concerning future revenues, operating costs, and investments in fixed and working capital
VII) Investors acquire portfolios to diversify the risk of individual assets; relevant risks to diversified investors are the additions to portfolio risk resulting from the inclusion of particular assets in diversified portfolios
VIII) In the CAPM, systematic risk is variations in total market returns affecting all assets; systematic risk is measured by an asset's beta coefficient (reflecting the asset's correlation with the market return) and is the only priced risk; unsystematic risk (uncorrelated with the market) is not priced because that risk can be diversified away and not affect portfolio returns
IX) In efficient markets, all investors are informed and there are no barriers (such as transaction costs or regulations) preventing arbitrage from eliminating any possible profits to be made without investing cash, assuming risk, or both
X) Expected cash flows should be discounted at the appropriate risk-adjusted rate: projects should be discounted at the project-risk rate; equity cash flows should be discounted at the risk-adjusted cost of equity; and debt cash flows from interest and principal payments should be discounted at the risk-adjusted cost of debt
XI) Entity or total firm cash flows or cash flows from investments with average firm risk not requiring changes in financial structure of the firm should be discounted at the weighted-average cost of capital (WACC)
XII) Capital structure differences do not affect the total market value of the firm in efficient markets without taxes; in efficient markets with taxes and no bankruptcy costs, firms should maximize debt (Modigliani-Miller capital structure analysis)
XIII) In efficient markets, dividend policy does not affect the value of the firm because the value of the firm is determined by its investments (Modigliani-Miller dividend analysis)
displayed 300 characters
General issues of this essay:
Related essays:
-
2 pages, 539 words
-
2 pages, 335 words
-
2 pages, 459 words
-
2 pages, 330 words
-
2 pages, 506 words
-
2 pages, 309 words
-
4 pages, 1008 words