Principles of Finance

Principles of Finance

Table of Contents

Introduction

What is Finance

History

Branches of Finance

Prerequisites

How to use this book?

Section 1 Introductory Concepts

Chapter 1 The Basics

An Overview on Money

Principle of Relative Valuation

Role of a CFO and Finance Managers

Is Accounting and Finance one and the same?

Chapter Financial Markets and Institutions

Stock Markets

Bond Markets

Money Markets

Derivatives Markets

Foreign Exchange Markets

Determinants of Interest Rates

The Federal Reserve System

Commercial Banks

Regulation of Commercial Banks

Chapter 2 The Time Value of Money

Introduction to Time Value of Money

The concept of returns

The Present Value of Money, Net Present Value and Discounting

The Opportunity Cost of Capital

The effect of compounding and Future Value

Summary

Chapter 3 Applications of Time Value of Money

How to make Investment Decisions?

All about Perpetuities

Annuity

Summary

Section 2 Investments and Returns

Chapter 4 Bonds

Rate of Returns: Varying and Annualized

The Yield Curve

Valuing Bonds

The Yield to Market Curve

Advanced Concepts of Bonds

Summary

Chapter 5 Risk and Return

What is Risk?

Types of Risk

Risk Management

Summary

Chapter 6 Corporate Finance

Weighted Average Cost of Capital

Beta and its Uses

Return on Equity

Modigliani & Miller

Project Valuation

Growth Opportunity

Computation or Table Lookup

Chapter 7 Portfolio Theory

Efficient-Market Hypothesis

Modern Portfolio Theory

Capital Asset Pricing Model

Arbitrage pricing theory

Correlation Among Securities

Optimal Market Portfolio

Summary

Authors

Minor Contributions

• Venkatesh Sridhar
• Patrick Felton
• Numerous Wikipedia authors whose work was copied here.