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  1. onomewrites

    CASH VALUE LIFE INSURANCE

    What is 'Cash-Value Life Insurance' Cash-value life insurance is a type of life insurance policy that pays out upon the policyholder's death, and also accumulates value during the policyholder's lifetime. The policyholder can use the cash value as a tax-sheltered investment (the interest and earnings on the policy are not taxable), as a fund from which to borrow and as a means to pay policy premiums later in life, or they can pass it on to their heirs. Cash-value life insurance is a type of life insurance policy that pays out upon the policyholder's death, and also accumulates value during the policyholder's lifetime. The policyholder can use the cash value as a tax-sheltered investment (the interest and earnings on the policy are not taxable), as a fund from which to borrow and as a means to pay policy premiums later in life, or they can pass it on to their heirs BREAKING DOWN 'Cash-Value Life Insurance' Whole life, variable life and universal life are all types of cash-value life insurance. Cash-value insurance is also known as permanent life insurance because it provides coverage for the policyholder's entire life. The other major category of life insurance is called term insurance, because it is generally in force only for a period of 10 to 30 years or until the policyholder cancels it. Cash-value insurance has higher premiums than term insurance because part of the premium pays for the death benefit coverage and part of it goes toward the policy's cash value. How Cash-Value Life Insurance Works Cash-value life insurance is designed as a permanent form of life insurance that includes a death benefit component and a savings component. Most cash-value life insurance policies require a fixed level premium payment, a portion of which is applied to insurance costs with the balance deposited into a cash-value account. The cash-value account earns a modest rate of interest which is allowed to accumulate tax-free. Over time, the cash-value account grows, which reduces the mortality risk of the life insurer. That is because, upon the death of the insured, the insurer is only obligated to pay the death benefit, not the cash value, which it retains. The decreasing mortality risk is also the reason why the insurer is able to guarantee a fixed, level premium for the life of the insured. Cash-Value as a Living Benefit Owners of a cash-value life insurance policy can benefit from savings that accumulate in the cash-value account. Cash-value savings can be accessed in a number of ways. With some types of policies, the cash value can be withdrawn. Withdrawals are tax-free to the extent they don’t exceed the total amount of premiums deposited into the policy. However, withdrawals can have the effect of decreasing the death benefit amount. Most cash-value policies allow for loans to be taken from the cash-value. Loans will also decrease the death benefit amount. Although there is no requirement for the loans to be repaid, the death benefit is reduced by the loan amount. Loans do accrue interest, which can reduce both the cash-value balance and the death benefit further. Cash-value can also be used to pay the policy premiums. If there is sufficient cash-value, a policyholder can stop paying for premiums out-of-pocket for the life of the policy.
  2. onomewrites

    Life Insurance

    LIFE INSURANCE What is 'Life Insurance' Life insurance is a protection against financial loss that would result from the premature death of an insured. The named beneficiary receives the proceeds and is thereby safeguarded from the financial impact of the death of the insured. The death benefit is paid by a life insurer in consideration for premium payments made by the insured. BREAKING DOWN 'Life Insurance' The goal of life insurance is to provide a measure of financial security for your family after you die. So, before purchasing a life insurance policy, consider your financial situation and the standard of living you want to maintain for your dependents or survivors. For example, who will be responsible for your funeral costs and final medical bills? Would your family have to relocate? Will there be adequate funds for future or ongoing expenses such as daycare, mortgage payments and college? It is prudent to re-evaluate your life insurance policies annually or when you experience a major life event like marriage, divorce, the birth or adoption of a child, or purchase of a major item such as a house or business. How Life Insurance Works Life insurance is a contract between an individual with an insurable interest and a life insurance company to transfer the financial risk of a premature death to the insurer in exchange for a specified amount of premium. The three main components of the life insurance contract are a death benefit, a premium payment and, in the case of permanent life insurance, a cash value account. Death Benefit: The death benefit is the amount of money the insured’s beneficiaries will receive from the insurer upon the death of the insured. Although the death benefit amount is determined by the insured, the insurer must determine whether there is an insurable interest and whether the insured can qualify for the coverage based on its underwriting requirements. Premium Payment: Using actuarially based statistics, the insurer determines the amount of premium it needs to cover mortality costs. Factors such as the insured’s age, personal and family medical history, and lifestyle are the main risk determinants. As long as the insured pays the premium as agreed, the insurer remains obligated to pay the death benefit. For term policies, the premium amount includes the cost of insurance. For permanent policies, the premium amount includes the cost of insurance plus an amount that is deposited to a cash value account. Cash Value: Permanent life insurance includes a cash value component which serves two purposes. It is a savings account that allows the insured to accumulate capital that can become a living benefit. The capital accumulates on a tax-deferred basis and can be used for any purpose while the insured is alive. It is also used by the insurer to mitigate its risk. As the cash value accumulates, the amount the insurer is at risk for the entire death benefit decreases, which is how it is able to charge a fixed, level premium.
  3. Helping Nigerians stay out of debt and gain financial independence is fast becoming a passion for many application developers who seek out better ways to help people save and motivate them to spend less. Here are two savings applications that have been designed to lead Nigerians out of financial slavery. ALAT Well, it is a digital banking service powered by Wema Bank Nigeria, which allows you to do all your banking transactions without being physically present at a bank. Alat digital bank allows you to open fully functional savings account using just your BVN and phone number in exactly 5mins. No paperwork required! At it’s core, ALAT by Wema bank is selling simplicity, reliability and convenience. ALAT digital banking will save you time with a simple account opening process that takes less than five minutes, help you put money away easily by automating your saving, make sure your bills are paid on time with its scheduled payments feature and deliver a free debit card (ALAT ATM card) you can activate, lock and unlock from your phone to use anywhere in Nigeria. You can open an ALAT account easily on from your phone. Install ALAT from the Apple App Store or the Google Play Store, open the app and sign up with your Bank Verification Number and a valid phone number. Thereafter, you will need to upload a photo of a valid means of identification (a government-approved ID card), a photo of a utility bill (not older than 3 months) and your passport photograph. Your account will be activated as soon as the ALAT team verifies your documents and address, usually in 24 hours. In the meantime, you can put money in your ALAT account but you can’t spend from it. Your ALAT account number will be emailed to you. It will also be displayed on your dashboard each time you log in to ALAT. Piggybank Piggybank is a Nigerian Financial Technology startup and they run a simple online savings scheme where they make periodic deductions for customers to save towards targets. Piggybank.ng securely makes saving possible by combining discipline plus flexibility to make you grow your savings & better manage your finances. Their mission is to make savings & investments more transparent and clear so that anyone can manage their finances. They promise that their clients can also earn interest income on the savings made. All that is required is to link a debit card to their platform online only. I was at first intrigued by the name. It is catchy and straight to the point. Try these apps today and leave your comments below.
  4. onomewrites

    Asset Allocation

    What Is Asset Allocation? Asset allocation is one of the most important steps in your portfolio management process. The initial step for the financial planner is to determine your required rate of return based on your financial goals, risk tolerance and time horizon. The second step is to ascertain capital market expectations, as well as the expected return and expected volatility of each asset classes. There are two categories of asset classes: 1. Traditional asset classes include stocks, bonds, and cash 2. Alternative asset classes include mutual funds, commodities, real estate, private equity, hedge funds The third step is asset allocation, in which the financial planner develops a strategy of how much money to invest in each asset class for you to achieve your return objective at a risk level that you are able and willing to accept. The premise of asset allocation is that each asset class has a different risk and return characteristic, thus providing the investor with risk diversification benefits. For instance, a 20% stock / 80% bond portfolio will provide lower risk and return and a more regular cash flow than an 80% stock/20% bond portfolio. It is also important to note that the latter is a riskier portfolio and is more suitable for young individuals in their twenties who have a longer time horizon and can tolerate stock market volatility. On the other hand, the first portfolio is more suitable for individuals who are nearing retirement and cannot withstand a drastic decline in their portfolio. Why Is Asset Allocation Important? As explained above, the most significant benefit of asset allocation is that it provides diversification and helps the investor manage the risk of his/her portfolio. While most people do understand this concept, they would still focus on which investment would outperform or whether equity markets would trend up or down. Although these are important considerations, many professional money managers believe that asset allocation is the most important decision for the investors What Are Different Asset Allocation Strategies? As previously mentioned, the most important factors in determining the asset mix are risk tolerance and time horizon. An individual with a longer time horizon and higher risk tolerance should automatically tilt his or her portfolio toward stocks. According to a traditional rule of thumb, the percentage of stock allocation should be equal to 100 minus your age. So, if your age is 25, then 75% of the portfolio should be allocated toward stocks. Over the years, many experts have expressed concern over using this rule as they believe it results in extremely conservative portfolios for retirees. Also, following the aforementioned rule deprives an individual of venturing into other asset classes other than stocks and bonds. For instance, during high inflation, stocks, bonds, as well as cash and cash equivalents tend to underperform. To combat inflation (in financial terms we can say to hedge inflation risks), individuals can invest their money in real estate and commodities to achieve low variability in their portfolio returns.
  5. Author: Nimi Akinkugbe Number of pages: 274 Whether you are just starting out and in your first job, financing your children's education, buying a property, approaching retirement, or somewhere in between, you need to take your personal finances seriously. In A-Z of Personal Finance the author, with a professional background of over two decades in banking and private wealth management, provides you with important practical information and useful tips on matters concerning you and your money. Personal Finance Expert & CEO of Bestman Games, Nimi Akinkugbe knows that a lot of people are worried about their personal finances. The A to Z of Personal Finance is a collection of words, topics and terms that are associated with the subject of personal finance. In this book, Nimi Akinkugbe focuses on some of the most significant principles used in her saving and investing philosophy. The purpose the book is to remove the mystique surrounding savings and investments, while dispelling the misconceptions attached to them. This book provides readers with concise information and tips on matters concerning the management of their money. A certified page turning book on money. The book seeks to empower people concerning their finances. In this book, she presents candid, useable insights and advice in understanding and managing personal finances and wealth. This book is highly recommended and won't amount to a waste of your precious time.
  6. . Author: Alex Becker Number of pages: 200 Found listed and reviewed on Amazon, the book, The 10 Pillars of Wealth: Mind-Sets of the World's Richest People, makes you think like a multimillionaire: and pushes you to leave the 9 to 5 behind. The world has led you to believe that financial freedom is not something you can willfully create in your life. You have been taught to view wealth as something that happens only to a lucky few who win a random business lottery or are blessed with unimaginable talent. The TRUTH is that creating excessive financial wealth does not come down to luck or talent. It comes down simply to your beliefs, understanding, and views--the ''pillars'' that reinforce your every action. Alex Becker not only breaks down the most important pillars for you but also shows you how to bring them into your life TODAY to begin generating lifelong financial freedom. Discover how to: Successfully quit your 9 to 5 and take back your life without taking massive financial risks, Separate your time from money so that you are constantly getting paid (even in your sleep), Understand the lessons multimillionaires have learned through years of trial and error, Map out the exact steps needed to build million-dollar businesses, Skip time-wasting mistakes and learn how to make money quickly by focusing solely on what gets you paid. In this fantastic book the author Alex Becker sets out to delineate the 10 most important concepts and mindstates behind getting rich in "Pillars" (that are the fancy equivalent of chapters). In each Pillar would find a notion to reject or except, or a mind-state, which then gets expounded upon in greater detail. The author is concise and to the point and incorporates a plethora of very good and relevant real-world examples. Pillar 1 ("Rejecting Getting Rich Slow") for example, refutes the glorified notion that the "right way" to be successful is to go to college, get a degree, work everyday for a salary; weekends off; spread out vacations, with slightly inclined pay raises and a good enough salary to eventually retire semi-satisfactorily later in life. Apparently, they say that it's "safer" to minimize risks (that the wealthiest self-made millionaires take) in your career and live just to insure a more guaranteed path to success and financial freedom. The author utterly rejects this notion. Pillar 4 ("Knowing Every Little Thing is 100% Your Fault") has to do with mind-state and as it's title states believing that every action you take is 100% your fault, and that when you take responsibility for all your circumstances; despite it's uncorrelated nature with your volition, you become more adept at manipulating your life situation. This as you may notice is a very common mindstate of the very successful. Pillar 6 ("Forgetting 'What If' And Focusing On 'What Is') is similar to Pillar 4 in a sense of the mindstate needed to endure, and most importantly get started. Many times in life we play hypothetical scenarios in our head of what will result in the actions we take rather than just taking them and calibrating, figuring out, and learning from them there and then. Pillar 8 ("Focusing Solely On What Gets You Paid") is a plan of action that states that you should put most if not all your efforts on the activities you undertake that ultimately get you paid. Other less profitable tasks should be outsourced and overall there will be a net benefit. There's a "Secret Pillar" that is very motivational. There's a bonus chapter that talks about the different kinds of online companies you can start and it outlines the details of each. Do you want to know about the remaining pillars? Buy the book today. If you want to get serious about changing your financial future, this is a MUST HAVE book.
  7. Author: Dave Ramsey Number of pages: 352 In this book, Dave Ramsey takes the time to address techniques for true wealth-building, not just the financial kind. He points to the strength in character and values. This book challenges us to look inward. Where do our true values and visions lie? When you find that answer, you know where you are. When you create that answer, you put yourself where you want to be. Mr. Ramsey's wise counsel will lead many to become prosperous, and his wife's tidbits made the whole book come together. They work as a team. Here is what Amazon review has to say: In his first bestseller, Financial Peace, Dave Ramsey taught us how to eliminate debt from our lives. Now in "More Than Enough," he gives us the keys to building wealth while also creating a successful, united family. Drawing from his years of work with thousands of families and corporate employees, Ramsey presents the ten keys that guarantee family and financial peace, including: values, goals, patience, discipline, and giving back to one's community. Using these essential steps anyone can create prosperity, live debt-free, and achieve marital bliss around the issue of finances. Filled with stories of couples, single men and women, children, and single parents, More Than Enough will show you: 1. How to create a budget that fits your income and creates wealth 2. What finances and romance have to do with one another 3. What role values play in your financial life 4. How to retire wealthy in every way And much, much more More Than Enough provides an inspiring wealth-building guide and a life-changing blueprint for a vital family dynamic.
  8. onomewrites

    Financial Statements -3

    Additional Financial Information In addition to financial statements, prospective lenders or investors will also want to see a Sales Forecast and, if your business will have employees, a Personnel Plan. Sales Forecast The Sales Forecast is a chart that breaks down how much your business expects to sell in various categories by month (for the next year) and by year (for the following two to four years). For a cleaning service business, the sales forecast might list one-time cleanings, monthly cleaning contracts and annual cleaning contracts and further break those down by houses, condos, apartment units, entire apartment buildings and office buildings. For a grocery store, the sales forecast might list projected sales of fruits, vegetables, dairy, meat, seafood, packaged goods and hot prepared meals. If your business sells a product, your sales forecast should include the cost of goods sold. Personnel Plan If your business will have employees and not just managers, you will need a Personnel Plan showing what types of employees you will have (for example, cashiers, butchers, drivers, stockers and cooks), along with what they will cost in terms of salary and wages, health insurance, retirement plan contribution, workers compensation and insurance Use of Loan or Investment Capital You’ve made a strong case for your business idea, its viability and your ability to execute it. So how, exactly, do you plan to use any money that lenders or investors offer you? They’ll want to know. If you’re requesting a $100,000 loan, for example, you might break that down into the amount that will go toward equipment such as cash registers, shelving and refrigerated display cases; purchasing inventory; and carrying out your marketing campaign. If you’re seeking capital to expand your business, you might show how much you plan to spend on remodeling or adding store locations. If you're selling business units, state the individual price per unit. Proposed Repayment Schedule or Exit Strategy Potential lenders will want to know how and when you intend to repay the loan or line of credit, so you should put together a proposed repayment schedule and terms. They may not agree with your suggestion, but offering proposed terms shows that you are considering the loan from the lender's perspective. Also describe what collateral is available to secure the loan, such as inventory, accounts receivable, real estate, vehicles or equipment. Be aware that lenders do not count the full value of your collateral, and each lender may count a different percentage. Potential investors will want to know when their investment will pay off and how much of a return to expect. They will also want to see that you have an exit strategy to cash out on your investment – and theirs. Do you plan to sell the business outright to another individual or company? Hold an initial public offering and go public? What will your exit strategy be if the business is failing? At what point have you determined that you will cut your losses and sell or close down, and how will you repay investors if this happens? Remember, no one has to lend you any money or invest in your company. When they are considering doing so, they will be comparing the risk and return of working with you to the risk and return they could get from lending to or investing in other companies. You have to convince them that your business is the most promising option.
  9. onomewrites

    Financial Statements -2

    Financial Statements-2 Whatever their form, financial statements must be complete, accurate and thorough. Each number on your spreadsheets must mean something. Don't estimate payroll, for instance; determine what it will actually be. Your income statement must reconcile to your cash flow statement, which reconciles to your balance sheet. Your balance sheet must balance at the end of every period. You must have supporting schedules (e.g., depreciation and amortization schedules) to back up your projections. Use realistic projections. In estimating the growth of your business, you will make certain assumptions, which should be based on thorough industry research combined with a strategy for how you'll compete. Also, analyze how quickly you'll achieve positive cash flow. Investors vary in their standards, but most like to see positive cash flow within the first year of operation, particularly if this if your first venture. In order for your projections to be accurate, you must know your business. If you've built an accurate and realistic model, but still project negative cash flow for more than 12 months, rethink your business model. When you put together your financial statements, make sure there are absolutely no typos or mistakes in your calculations. If you are inexperienced in preparing these statements, hire an accountant to help you. Even if you and all of your business partners know exactly what you are doing, you may still want to hire an unbiased, outside professional to check your work and give you a second opinion on whether your projections are realistic. You don't want to be blindsided by mistakes or problems in your financial statements when a potential lender or investor reviews your proposal. What You Can Learn from Your Financial Statements While the financial statements are helpful in and of themselves, the data they contain can also be used to calculate financial ratios such as gross profit margin, return on investment and return on owner’s equity. Ratios provide helpful information about a company's liquidity, profitability, debt, operating performance, cash flow and investment valuation.
  10. onomewrites

    Financial Planning -2

    The confusion surrounding the term financial plans might stem from the fact that there are many types of financial statement reports. Individually, financial statements show either the past, present, or future financial results. More specifically, financial statements also only reflect the specific categories which are relevant. For instance, investing activities are not adequately displayed in a balance sheet. A financial plan is a combination of the individual financial statements and reflect all categories of transactions (operations & expenses & investing) over time. Some period-specific financial statement examples include pro forma statements (historical period) and prospective statements (current and future period). Compilations are a type of service which involves "presenting, in the form of financial statements, information that is the representation of management “There are two types of "prospective financial statements": financial forecasts & financial projections and both relate to the current/future time period. Prospective financial statements are a time period-type of financial statement which may reflect the current/future financial status of a company using three main reports/financial statements: cash flow statement, income statement, and balance sheet. "Prospective financial statements are of two types- forecasts and projections. Forecasts are based on management's expected financial position, results of operations, and cash flows." Pro Forma statements take previously recorded results, the historical financial data, and present a "what-if": "what-if" a transaction had happened sooner. While the common usage of the term "financial plan" often refers to a formal and defined series of steps or goals, there is some technical confusion about what the term "financial plan" actually means in the industry. For example, one of the industry's leading professional organizations, the Certified Financial Planner Board of Standards, lacks any definition for the term "financial plan" in its Standards of Professional Conduct publication. This publication outlines the professional financial planner's job, and explains the process of financial planning, but the term "financial plan" never appears in the publication's text. The accounting and finance industries have distinct responsibilities and roles. When the products of their work are combined, it produces a complete picture, a financial plan. A financial analyst studies the data and facts (regulations/standards), which are processed, recorded, and presented by accountants. Normally, finance personnel study the data results - meaning what has happened or what might happen - and propose a solution to an inefficiency. Investors and financial institutions must see both the issue and the solution to make an informed decision. Accountants and financial planners are both involved with presenting issues and resolving inefficiencies, so together, the results and explanation are provided in a financial plan.
  11. onomewrites

    Financial Planning -1

    FINANCIAL PLANNING Financial planning is the task of determining how a business will afford to achieve its strategic goals and objectives. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set. The financial plan describes each of the activities, resources, equipment and materials that are needed to achieve these objectives, as well as the timeframes involved. The Financial Planning activity involves the following tasks: · Assess the business environment · Confirm the business vision and objectives · Identify the types of resources needed to achieve these objectives · Quantify the amount of resource (labor, equipment, materials) · Calculate the total cost of each type of resource · Summarize the costs to create a budget · Identify any risks and issues with the budget set. Performing Financial Planning is critical to the success of any organization. It provides the Business Plan with rigor, by confirming that the objectives set are achievable from a financial point of view. It also helps the CEO to set financial targets for the organization, and reward staff for meeting objectives within the budget set. The role of financial planning includes three categories: 1. Strategic role of financial management 2. Objectives of financial management 3. The planning cycles When drafting a financial plan, the company should establish the planning horizon,which is the time period of the plan, whether it be on a short-term (usually 12 months) or long-term (2–5 years) basis. Also, the individual projects and investment proposals of each operational unit within the company should be totaled and treated as one large project. This process is called aggregation. A financial plan may contain prospective financial statements, which are similar, but different, than a budget. Financial plans are the ENTIRE financial accounting overview of a company. Complete financial plans contain all periods and transaction types. It's a combination of the financial statements which independently only reflect a past, present, or future state of the company. Financial plans are the collection of the historical, present, and future financial statements; for example, a (historical & present) costly expense from an operational issue is normally presented prior to the issuance of the prospective financial statements which propose a solution to said operational issue.
  12. MUST HAVE FINANCIAL LITERACY SKILLS What is financial Literacy? Financial Literacy is the set of skills and knowledge that allow you to understand: · The financial principles you need to know to make informed financial decisions and · The financial products that impact on financial well-being. Things to focus on in building your financial literacy skill 1. Understanding the key financial product you may need throughout your life -- including bank accounts, savings plans, retirement savings plans, and basic investments like stocks, bonds and mutual funds 2. Understand basic financial concepts like interest rate, investment return, risk, diversification and so on 3. Understanding money and financial issues – even if you don’t really like to talk about them Sound Decisions -- You will have to make choices about saving, spending, budgeting, investing and managing debt throughout your life. Examples are getting education or another degree, starting a new job, buying a house, starting a family, getting ready to retire and living your senior years. Change Management -- You will have to proactively manage changes that affects your everyday financial well-being including events in general economy like recent collapse of financial markets, rising unemployment and the threat to high inflation. Some Basic Tips i. Identify ways to earn and save money. The rule of saving is “live below your means’’ in other words, do not spend every penny you make. ii. Create a realistic spending plan and stick to it. It may need occasional adjusting when a situation changes in your life, but practice discipline in sticking to your plan. Always have a budget iii. Reduce impulsive buying. Avoid buying anything until you’ve had time to determine how it will fit into your spending plan. If it doesn’t fit, don’t buy. iv. Don’t not make too many high risk investments -- when the promised reward is too good to be true, better to risk only money you can afford to lose. Also make your investments via a reputable investment firm/broker -- whether stocks, real estate or bonds. v. Let your savings work for you; leave savings in investment accounts that allow them to grow in a compounding way (the interest/gain earning extra interest/gain). vi. Shop for the best investments -- a proper mix of risk to reward. Don't put all your money in a savings account to earn a meager 3% annual interest rate when you can put in Treasury Bills that are just as safe (or even safer as it is backed by the Federal Government) and will earn you 16% annual return rate. vii. Diversify. Don't put all your eggs in one basket. Don't even listen to people who say you should put all your eggs in one basket and watch it. No successful investor puts all his investment in one asset class. A hallmark of proper financial literacy is a balanced and well-diversified investment portfolio.
  13. Today, I woke up to a good news. Microsoft approved my "Nigerian Market Data" Excel App. So it is now globally available via the Office App store. If you use Excel 2016 or Excel Online, you can install and try out the app. Below are the installation steps for Excel 2016. And if you use Excel online: Upon successful installation, you will find the add-in under the Home menu as the last item on the right. It is the first version and I plan to radically improve its design and add to the functionality. You can help shape future updates by installing it, using it and letting me know your feedback. Thanks!
  14. On Thursday I signed for the Udemy course: Python for Finance: Investment Fundamentals & Data Analytics It would be helping me learn how to apply Python to Financial and Investment analysis. Below is a copy paste of a part of the course description and content. If you are a complete beginner and you know nothing about coding, don’t worry! We will start from the very basics. The first part of the course is ideal for beginners and people who want to brush up their Python skills. And then, once we have covered the basics, we will be ready to tackle financial calculations and portfolio optimization tasks. Finance Fundamentals. And it gets even better! The Finance block of this course will teach you in-demand real-world skills employers are looking for. To be a high-paid programmer, you will have to specialize in a particular area of interest. In this course, we will focus on Finance, covering many tools and techniques used by finance professionals daily: Rate of return of stocks Risk of stocks Rate of return of stock portfolios Risk of stock portfolios Correlation between stocks Covariance Diversifiable and non-diversifiable risk Regression analysis Alpha and Beta coefficients Measuring a regression’s explanatory power with R^2 Markowitz Efficient frontier calculation Capital asset pricing model Sharpe ratio Multivariate regression analysis Monte Carlo simulations Using Monte Carlo in a Corporate Finance context Derivatives and type of derivatives Applying the Black Scholes formula Using Monte Carlo for options pricing Using Monte Carlo for stock pricing Everything is included! All these topics are first explained in theory and then applied in practice using Python. Is there a better way to reinforce what you have learned in the first part of the course? This course is great, even if you are an experienced programmer, as we will teach you a great deal about the finance theory and mechanics you would need if you start working in a finance context. What makes this course different from the rest of the Programming and Finance courses out there? This course will teach you how to code in Python and how to apply these skills in the world of Finance. It is both a Programming and a Finance course. High-quality production – HD video and animations (this isn’t a collection of boring lectures!) Knowledgeable instructors. Martin is a quant geek fascinated by the world of Data Science, and Ned is a finance practitioner with several years of experience who loves explaining Finance topics, here on Udemy. Complete training – we will cover all major topics you need to understand to start coding in Python and solving the financial topics introduced in this course (and they are many!) Extensive Case Studies that will help you reinforce everything you’ve learned. Course Challenge: Solve our exercises and make this course an interactive experience. Excellent support: If you don’t understand a concept or you simply want to drop us a line, you’ll receive an answer within 1 business day. Dynamic: We don’t want to waste your time! The instructors keep up a very good pace throughout the whole course. I have already begun taking the course.
  15. You can register on Philanthropy University for Financial Modeling for the Social Sector at https://philanthropyuniversity.novoed.com/financial-modeling-2016-4 About the course Social sector leaders must connect their impact work with the right business model to achieve sustainability. With finite resources and limited staffing, organizations that are more focused on immediate needs rather than long-term sustainability can find developing the right business plan challenging. This course teaches nonprofit organizations, social entrepreneurs, corporate entrepreneurs and social change leaders how to use financial modeling and creative approaches to market-based funding to scale the impact of their work. This course will be valuable for organizations of all shapes and sizes, and particularly useful for those in the early stages of development. What You'll Do: Understand the distinction between an operational unit and a head office and the financial relationship between the two Understand how to estimate the reach and size of your operational unit and identify what costs at scale means to your venture or an initiative Understand how to think about and calculate the funding requirements for building and maintaining a capacity that allows you to innovate, learn, and grow your organization Requirements: Approximately 4-5 hours per module watching videos, reviewing the reading, participating in class discussion online, and completing assignments. You will need a computer that allows you to watch the video lectures and provides the ability to upload all your assignments. *To receive a Statement of Accomplishment, you will need to complete at least 3 out of the 5 assignments. Syllabus No details yet
  16. You can register on MIT Opencourseware for The Law of Mergers and Acquisitions at https://ocw.mit.edu/courses/sloan-school-of-management/15-649-the-law-of-mergers-and-acquisitions-spring-2003/ About the course This course is designed to give students an introduction to the law-sensitive aspects of Mergers & Acquisitions (M&A). In Module I, we examine the legal implications of key roles and deal structures, and walk through some of the issues that would typically arise in a simple and friendly transaction. We also give a class to the legal issues arising in LBOs and the legal concerns of financial sponsors more generally, and another class to employment-related issues, including those relating to managers facing unsettled circumstances. In Module II, we look at a variety of complications, including those that arise in the friendly or unfriendly purchase of a publicly-held company; deals involving distressed and hi-tech companies; antitrust concerns; allegations of misconduct by management or board members; and deals involving non-U.S. companies. Syllabus CLASS # TOPICS Module I - An Overview of Fundamentals 1 An Overview of Key Players, Their Legal Responsibilities and Early Roles 2 and 3 Tax Considerations in Deal Structures (PDF) 4 Putting the Deal Together (PDF) 5 Employment Law: The Perspectives of Key Employees and of the Corporation as an Employer (PDF) 6 LBOs and the Perspective of Financial Sponsors Module II - Some Complications 7 Intellectual Property as an Asset; Selling and Buying the Hi-tech Start-up (PDF) 8 The Legal Liability of Managers and Board Members (PDF) 9 Antitrust Concerns and Regulatory Clearance (PDF) 10 The Distressed Company (PDF) 11 and 12 Some Complex Deal Terms, Including Issues That Arise in the Purchase of a Publicly-Held Company 13 Wrap-up
  17. You can register on MIT Opencourseware for The Law of Corporate Finance and Financial Markets at https://ocw.mit.edu/courses/sloan-school-of-management/15-617-the-law-of-corporate-finance-and-financial-markets-spring-2004/ About the course 15.617 is an introduction to business law which covers the fundamentals, including contracts, liability, regulation, employment, and corporations, with an in-depth treatment of the law of finance, including law-sensitive aspects of M&A transactions, national and international financial and securities markets, venture capital and private equity, the financial structure of the corporation and other business entities, antitrust, bankruptcy and reorganization, the regulation of financial service providers, and the regulatory and liability risks associated with innovative financial products and services. Some Advice from John Akula on Picking a Law Course -- I offer the following three law courses at Sloan: 15.615/15.647, Law for the Entrepreneur and Manager (fall and spring) (615 is the full-semester course; 647 is the first half) 15.616, Innovative Businesses and Breakthrough Technologies - The Legal Issues (fall only) 15.617, The Law of Corporate Finance and Financial Markets (spring only) Based on my experience as a practicing lawyer, I recommend that students at Sloan take a law course. Managers face many law-sensitive issues that are crucial to the welfare of their companies and their own careers. These issues often arise suddenly and outside the normal course of business. Each of my courses is designed to give you the understanding you will need to exercise good judgement and leadership in those situations. Each course will also provide you with the foundation in law that you will need to make effective use of legal advisors, and to develop later in your careers a more sophisticated understanding of any legal issues that are central to your particular responsibilities. However, I do not expect students to take more than one law course. Thus my courses are designed as an array of choices, not a sequence, and there is substantial overlap with respect to legal fundamentals. You should pick the one that interests you most. Syllabus LEC # TOPICS Module I - Basic Building Blocks 1 Introduction The Law of Duties 2 The Law of Duties (cont.) (PDF) 3 The Hard Edge of Regulation 4 Contracts (PDF) 5 Contracts (cont.) (PDF) 6 Module I Wrap-up Module II - M&A 7 Key Players, Stages and Deal Structures (PDF) Guest: Terry Mahoney, Partner, LeBoeuf, Lamb, Greene & McRae 8 Tax Considerations in Structuring a Deal (PDF) Guest: Martin Allen, Partner, Kirkpatrick & Lockhart 9 The Basic Terms of a Purchase Agreement (PDF) Guest: Terry Mahoney, Partner, Leboeuf Lamb Greene & McRae 10 Buying a Publicly-held Company I (PDF) Guests: Stu Cable and Jim Matarese, Partners, Goodwin Procter 11 Buying a Publicly-held Company II (PDF) Guests: Stu Cable and Jim Matarese, Partners, Goodwin Procter 12 International M&A and Joint Ventures (PDF) Guest: David Walek, Ropes & Gray Module III - Forms of Business Entities 13 Forms of Doing Business - An Introduction (PDF) 14 The Publicly-held Corporation I - Insider Trading and Disclosure (PDF) Guest: Jocelyn Arel, Partner, Testa Hurwitz & Thibeault 15 The Publicly-held Corporation II - Governance and Accountability Guest: Lisa Wood, Partner, Foley Hoag Module IV - Raising and Investing Money 16 Venture Capital (PDF) Guest: Edward Freedman, Corporate Counsel, Flagship Ventures 17 Other Private Equity (PDF) Guest: John LeClaire and David Watson, Partners, Goodwin Procter 18 Public Offerings and Investment Banking Guest: James Hackett, Partner, Choate Hall & Stewart 19 Commercial Lending and Securitization (PDF) Guest: Matthew Furlong, Partner, Bingham McCutchen 20 Building a Hedge Fund Portfolio (PDF) Guest: Tim Diggins, Partner, Ropes & Gray Module V - Competition, Mobility and Insolvency 21 Antitrust (PDF) 22 Bankruptcy and Reorganization I (PDF) Guest: John Whitlock, Partner, Palmer & Dodge 23 Bankruptcy and Reorganization II (PDF) Guest: John Whitlock, Partner, Palmer & Dodge 24 Wrap-up
  18. You can register on MIT Opencourseware for Business Analysis Using Financial Statements at https://ocw.mit.edu/courses/sloan-school-of-management/15-535-business-analysis-using-financial-statements-spring-2003/ About the course The purpose of this class is to advance your understanding of how to use financial information to value and analyze firms. We will apply your economics/accounting/finance skills to problems from today's business news to help us understand what is contained in financial reports, why firms report certain information, and how to be a sophisticated user of this information. Syllabus LEC # TOPICS 1 Introduction: Accounting Scandals, Business Valuation and Market Efficiency (PDF) 2 The Basics of Company Valuation: DCF Foundations Setting the Stage for Using Accounting Information (PDF) 3 Cash Flow Analysis: Is Cash King? (PDF) 4 Using Accounting Earnings for Valuation - Why Earnings and Not Cash Flow? (PDF) 5 Comparative Analysis: What Analysts Do? (PDF) 6 Turbo Accounting I - A Review of How to Read a Financial Statement (PDF) 7 How Companies Cook the Books (PDF) 8 Detecting Earnings Management: Applied Analysis (PDF) 9 1) Quiz #1 - In Class 2) Final Guidance/Overview on Part 1 of Project 10 Analyst Team Presentations and Due Diligence Response by Matched Teams 11 Analyst Team Presentations and Due Diligence Response by Matched Teams 12 Risk Assessment: Do Financial Statements Capture Risk? (PDF) 13 Risk I: Cost of Capital: Is CAPM Dead? (PDF) 14 Risk and Accounting Trading Strategies: Do Investors Understand Accounting? (PDF) 15 Risk II: Accounting Numbers in Contracts: Ratio Analysis and Bankruptcy Detection (PDF) 16 Mergers and Acquisitions: Impairment of Goodwill, Writedowns, Private Firm Valuation (PDF) 17 Employee Stock Options and Valuation: Should Options be Expensed? Understanding the current debate (PDF) 18 1) Quiz #2 - In Class 2) Final Guidance/Overview on Part 2 of Project 19 Off Balance Sheet Activities - Deconstructing the Enron Debacle and Beyond (PDF) 20 Pension Plans - The Next Accounting Disaster? (PDF) 21 International Financial Analysis (PDF) 22 Hot Topics in Accounting and Valuation: + Capstone (PDF) 23 Analyst Team Presentations and Due Diligence Response by Matched Teams 24 Analyst Team Presentations and Due Diligence Response by Matched Teams
  19. You can register on MIT Opencourseware for Financial and Managerial Accounting at https://ocw.mit.edu/courses/sloan-school-of-management/15-514-financial-and-managerial-accounting-summer-2003/ About the course The goal is to help you develop a framework for understanding financial, managerial, and tax reports. Many at the forefront of accounting education have goals generally consistent with this course objective. For example, Dr. Jean Wyer, a former accounting professor who refers to herself as "Dean" of Cooper & Lybrand's educational programs, told soon-to-be professors at an Accounting Doctoral Consortium to abandon debits and credits. To paraphrase Dr. Wyer: "You should not be teaching debits and credits; they are a holdover from the past that were needed to balance entries and accounts before we had computers. Modern electronic information systems do not have T-accounts or journal entries, and students need only understand a lesson taught the first day of an algebra course to master bookkeeping concepts: Assets = Liabilities + Owners' Equity." Because 15.514 is likely quite different than you might expect, the next few pages provides an overview of our objectives, how we plan to get there, and additional details about how each class will be structured. The essential elements of our strategy to help you reach the course goal is outlined in the course challenges. In addition, the structure of each day's class and related assignments are designed complement the challenges. Syllabus LEC # TOPICS OVERVIEW NOTES HANDOUTS 1 Overview Acknowledgement is hereby given to Professor G. Peter Wilson for his authorship of the following works incorporated into this slideshow: The Five Challenges (slides 4-5) "What Do Intel and Accountants Have in Common?" (slides 9-16) A Conceptual Framework for Financial Accounting (slide 17) (PDF) (PDF) 2 Principles of Accrual Accounting (PDF) (PDF) 3 Elements of an Annual Report and Financial Ratios (PDF) 4 Revenue Recognition (PDF) (PDF) 5 Revenue Recognition (PDF) (PDF) 6 Inventory / Cost of Goods Sold (PDF) (PDF) 7 Long-Term Assets / Depreciation (PDF) (PDF) 8 Matching Principle for PP&E (PDF) 9 Statement of Cash Flow (PDF) (PDF) Exercise for Preparing the Statement of Cash Flows (PDF) Note on Cash Flow Statements (PDF) 10 Additional Discussion of Topics (PDF) 11 Accounting for Taxes (PDF) (PDF) 12 Marketable Securities (PDF) (PDF) 13 Current Liabilities / Long-Term Debt (PDF) (PDF) Class Preparation Questions (PDF) 14 Long-Term Debt (PDF) (PDF) 15 Leases and Off-Balance Sheet Financing (PDF) (PDF) 16 Introduction to Cost Concepts (PDF) (PDF) 17 Activity-Based Costing (PDF) 18 Moving Beyond ABC (PDF) 19 Managerial Accounting and Financial Reporting (PDF) 20 Wrap-up (PDF)
  20. Michael Olafusi

    MIT: Financial Accounting

    You can register on MIT Opencourseware for Financial Accounting at https://ocw.mit.edu/courses/sloan-school-of-management/15-511-financial-accounting-summer-2004/ About the course The objective of the course is to introduce the language of business and to train you in the analysis of financial statements. Accounting attempts to measure and report corporate performance. Users demand the performance measure in a variety of decisions they make. For example, Managers use accounting information in making investment decisions; Investors use accounting information in valuing stocks; Bankers rely on accounting information in deciding whether to lend money to a business and in assessing the risk of the loan; and Accounting information is crucial in evaluating the performance of employees at various levels in an organization. In making all of these decisions, an interdisciplinary understanding of the entire business is necessary. Toward this end, the course also introduces concepts from finance and economics (e.g., cash flow discounting, risk, valuation, and criteria for choosing among alternative investments) throughout the course, which will enable students to place accounting in the context of a business. Syllabus SES # TOPICS L1 Overview and Introduction to Financial Statements (PDF) Administrative Matters, Discussion of Accounting Framework L2 The Balance Sheet (PDF) L3 The Income Statement and Principles of Accrual Accounting (PDF) L4 The Accrual Accounting Process of Preparing Financial Statements (PDF) L5 The Accrual Accounting Process of Preparing Financial Statements (cont.) (PDF) L6 The Accounting Process L7 Statement of Cash Flows (PDF) L8 Statement of Cash Flows (cont.) Financial Statement Analysis (PDF) L9 Receivables and Revenue Recognition (PDF) L10 Receivables and Revenue Recognition (cont.) (PDF) L11 Inventories (PDF) L12 Long-lived Assets (PDF) L13 Matching Principle for PP&E (PDF) L14 Current Liabilities and Contingencies (PDF) L15 Time Value of Money (PDF) Long-term Debt (PDF) L16 Long-term Debt and Leases (PDF) L17 Deferred Taxes (PDF) Marketable Securities (PDF) L18 Investments, and Business Combinations (PDF) L19 Business Combinations and Course Review (PDF)
  21. Michael Olafusi

    MIT: Analytics of Finance

    You can register on MIT Opencourseware for Analytics of Finance at https://ocw.mit.edu/courses/sloan-school-of-management/15-450-analytics-of-finance-fall-2010/ About the course This course covers the key quantitative methods of finance: financial econometrics and statistical inference for financial applications; dynamic optimization; Monte Carlo simulation; stochastic (Itô) calculus. These techniques, along with their computer implementation, are covered in depth. Application areas include portfolio management, risk management, derivatives, and proprietary trading. Syllabus LEC # TOPICS LECTURE NOTES 1 Arbitrage-free pricing models (PDF - 1.1MB) 2 Stochastic calculus and option pricing Code: Quadratic variation simulation (PDF) (M) 3 Simulation methods Code: Black-Scholes model Monte Carlo illustration Code: Black-Scholes with a jump Monte Carlo (PS1, Q2) Code: Monte Carlo with control variates, stochastic volatility model (PDF) (M) (M) (M) 4 Dynamic portfolio choice I: Static approach to dynamic portfolio choice (PDF) 5 Dynamic portfolio choice II: Dynamic programming (PDF) 6 Dynamic portfolio choice III: Numerical approximations in dynamic programming Code: Numerical DP solution (PDF) (M) 7 Parameter estimation (PDF) 8 Standard errors and tests (PDF) 9 Small-sample inference and bootstrap (PDF) 10 Volatility models (PDF) 11 Review: Arbitrage-free pricing and stochastic calculus (PDF) 12 Review: DP and econometrics (PDF) The following handouts and slides were used to supplement lecture materials. Crossing probabilities of the Brownian motion (PDF) Key points: Derivatives and Monte Carlo (PDF) Dynamic programming: Justification of the principle of optimality (PDF) Examples of dynamic programming problems (PDF)
  22. Michael Olafusi

    MIT: Entrepreneurial Finance

    You can register on MIT Opencourseware for Entrepreneurial Finance at https://ocw.mit.edu/courses/sloan-school-of-management/15-431-entrepreneurial-finance-spring-2011/ About the course Entrepreneurial Finance examines the elements of entrepreneurial finance, focusing on technology-based start-up ventures and the early stages of company development. The course addresses key questions which challenge all entrepreneurs: how much money can and should be raised; when should it be raised and from whom; what is a reasonable valuation of the company; and how should funding, employment contracts and exit decisions be structured. It aims to prepare students for these decisions, both as entrepreneurs and venture capitalists. In addition, the course includes an in-depth analysis of the structure of the private equity industry.4 This course will use a combination of case discussions and lectures to study entrepreneurial finance. The course is targeted to budding entrepreneurs and venture capitalists. There are five main areas of focus: Business Evaluation and Valuation: Here we will give you some tools to valuate early stage business opportunity. We will also review the standard tools of valuation applied to start-up situations and introduce the venture capital method and the real options approach to valuation. Financing: In this module, we will highlight the main ways that entrepreneurs are financed and analyze the role of financial contracts in addressing information and incentive problems in uncertain environments. Venture Capital Funds: We will look at the structure of venture capital funds and their fund raising process. This module will include issues of corporate venture capital and private equity funds in emerging market economies. Employment: We will study the issues of attracting and compensating employees in start-ups. Exit: We will discuss how founders should exit. Should they sell to another company, take it public, or continue independently as a private company? Carl Stjernfeldt (General Partner at Castile Ventures) will co-teach a number of sessions. We are very lucky to have Carl participate so please use his time judiciously! We also have a number of additional guest speakers who will discuss recent developments in the industry. Syllabus SES # TOPICS LECTURE NOTES 1 Introduction and overview of entrepreneurial finance 2 DermaCare Business Valuation 3 Discounted cash flow (DCF) and the venture capital method (PDF) 4 Netflix 5 Real option valuation (PDF) 6 Real option valuation (cont.) Deal Structure 7 Genzyme/Geltex 8 Deal structure (PDF) 9 Walnut Venture Associates (A) and (D) 10 Deal structure (cont.) (PDF) 11 Guest: John H. Chory (Partner, WilmerHale Venture Group) 12 Metapath Team Sheet Negotiation 13 BNI Video Guests: Conrad Clemson (Founder and CEO, BNI Video) and Carl Stjernfeldt (General Partner, Castile Ventures) 14 BNI Video Guest: Carl Stjernfeldt (General Partner, Castile Ventures) Venture Capital Funds 15 Guest: Dr. William Janeway (Senior Advisor, Warburg Pincus) 16 Portfolio and partnership Guest: Carl Stjernfeldt (General Partner, Castile Ventures) 17 VC Vignettes Guest: Carl Stjernfeldt (General Partner, Castile Ventures) 18 Grove Street Advisors - September 2009 Guest: Christopher E. Yang (General Partner, Grove Street Advisors) 19 Forte Ventures Exit 20 Initial public offering (IPO) Guest: Michael Szeto (Managing Director of Private Equity, WR Hambrecht) (PDF - 1.0MB) (Courtesy of Michael Szeto. Used with permission.) 21 Grand Junction Guest: Michael Szeto (Managing Director of Private Equity, WR Hambrecht) (PDF) (Courtesy of Michael Szeto. Used with permission.) 22 Blackstone 23 Final review (PDF)
  23. You can register on MIT Opencourseware for Advanced Topics in Real Estate Finance at https://ocw.mit.edu/courses/urban-studies-and-planning/11-434j-advanced-topics-in-real-estate-finance-spring-2007/ About the course This half-semester course introduces and surveys a selection of cutting-edge topics in the field of real estate finance and investments. The course is designed primarily for Masters of Science in Real Estate Development (MSRED) students interested in doing their summer semester thesis in the area of real estate finance and investments. The class is limited to a small size, with preference given to MSRED students. The course will follow an informal "seminar" format to the maximum degree possible, with students expected to take considerable initiative. Students are encouraged to explore in depth a topic of their interest. The only graded requirement is a term paper on that topic. Lectures and discussions led by the instructors will be supplemented by several guest speakers from the real estate investment industry, who will present perspectives on current trends and important developments in the industry. Syllabus TOPICS LECTURE NOTES Engineering Economy Module Adapted from Prof. Richard de Neufville's course ESD.70 (PDF) The "8 Trillion Opportunity" (PDF) Value of Flexibility Guest Lecturer: Prof. Richard de Neufville, MIT (PDF) Flexibility in Real Estate Project Development Guest Lecturer: Prof. Richard de Neufville, MIT (PDF) Considerations in the Design and Construction of Investment Real Estate Research Indices (PDF) Real Estate Indexes (PDF)
  24. Michael Olafusi

    MIT: Real Estate Capital Markets

    You can register on MIT Opencourseware for Real Estate Capital Markets at https://ocw.mit.edu/courses/urban-studies-and-planning/11-432j-real-estate-capital-markets-spring-2007/ About the course This half-semester course introduces and surveys the major public capital market real estate vehicles, REITs and MBS (with primary emphasis on CMBS). Some background is also included in basic modern portfolio theory and equilibrium asset pricing. This course is primarily designed to provide MSRED students with a basic introduction to the public capital market sources of financial capital for real estate, and how those markets value such capital investments. Students can take 11.432/15.427 without having taken 11.431/15.426 provided they have taken 15.401. Such students may have to do some review of the real estate terminology presented in the earlier course if they are not already familiar with basic real estate finance and investment terminology (see the "Key Terms" listed in the backs especially of Chapters 1, 9, 11, 14, and 16-18 of the text). Sloan and other students taking this course as an elective should understand that this is a required course in MITs MSRED program core and, as such, is taught as a "core" subject. That is, a large body of material is covered in a short amount of time, aimed at students who do not necessarily have much finance background. This precludes primary reliance on the case method (though there are some cases). The course reflects the rather quantitative nature of the subject matter (i.e., the course features intensive lectures presenting large quantities of analytical material). Syllabus LEC # TOPICS LECTURE NOTES 1 Course introduction, portfolio theory Chapters 21 and 22, slides 19-29 (PDF) 2 Portfolio theory and CAPM Chapters 21 and 22, slides 30-59 3 CAPM (cont.) Chapters 21 and 22, slides 60-73 4 REITs introduction Chapter 23, slides 80-82, 1-26 (PDF) 5 REIT CF-based valuation (as stocks) Chapter 23, slides 27-46 6 REIT NAV-based valuation and asset valuation Chapter 23, slides 79, 47-72 7 Lincoln case due 8 REITs management considerations, wrap-up Chapter 23, slides 73-78 9 CMBS introduction, CMBS structure (start) Chapter 20, slides 1-16 (PDF) 10 CMBS structure and rating Chapter 20, slides 17-36 11 CMBS rating and other topics Chapter 20, slides 37-54 12 Real estate equity derivatives: Index swaps Chapter 26 (PDF) Derivatives (PDF) 13 Course wrap-up, CMBS case due
  25. Michael Olafusi

    MIT: Real Estate Finance and Investment

    You can register on MIT Opencourseware for Real Estate Finance and Investment at https://ocw.mit.edu/courses/urban-studies-and-planning/11-431j-real-estate-finance-and-investment-fall-2006/ About the course This course is an introduction to the most fundamental concepts, principles, analytical methods and tools useful for making investment and finance decisions regarding commercial real estate assets. As the first of a two-course sequence, this course will focus on the basic building blocks and the "micro" level, which pertains to individual properties and deals (as distinguished from the "macro" level that pertains to portfolio, firm level, and investment management considerations - the macro level will be covered in 11.432 next spring). This course will consider investment in both "stabilized" (fully operational) income properties, and development investments. Our perspective will be that of so-called "institutional" real estate decision-making (e.g., pension funds, REITs, banks, life insurance companies), regarding large-scale commercial property. At this level it is important to integrate the perspectives of "Wall Street" (the mainstream securities investments and corporate finance establishment) and "Main Street" (local, traditional real estate business community). This requires a treatment of real estate investment rigorously integrated with, and built upon, the modern corporate finance and investments perspective as taught, for example, in the Brealey-Myers text in the Sloan introductory finance theory curriculum (15.401). However, a key objective of this course is to recognize the unique features of real estate that distinguish it from so-called "mainstream" securities investments and corporate finance. Syllabus SES # TOPICS 1 Course introduction (Geltner) (PDF) 2 DCF (McGrath) (PDF) 3 DCF (cont.) and NPV (McGrath) 4 NPV (Geltner) 5 Real estate cash flows, proformas (McGrath) (PDF) 6 Real estate opportunity cost of capital (McGrath) 7 Leverage (McGrath) (PDF) 8 Case 1: Private practice case I due (McGrath) 9 WACC formula (McGrath) 10 After-tax cash flows (McGrath) 11 After-tax investment analysis and capital budgeting (Geltner) (PDF) 12 Commercial mortgage underwriting (Geltner) (PDF) 13 Case 2: Private practice case II due (McGrath) (PDF) 14 Exam 1 (Chapters 10-13, 14.1-5) 15 Development financial feasibility (Geltner) (PDF) 16 Development project evaluation (Geltner) (PDF) 17 Intro case 3, madison project example (Geltner) 18 Madison example (cont.) Finish development project investment analysis (Geltner) 19 Case 3: One Lincoln St case I (development) due (McGrath) 20 Lincoln (post) and Inter-Mountain (pre) case discussions (Geltner) 21 Capital structure debt vs equity, etc. (Geltner) (PDF) 22 Project level capital structure (Geltner) 23 Real options and land value (Geltner) (PDF) 24 Real options and land value (cont.) (Geltner) 25 Case 4: "Inter-Mountain" development project case (Larry Ellman, Citigroup) guest participant 26 Case 4 debriefing; review and catch up (Geltner) 27 Real options (cont.) review, catch up (Geltner) Final exam (Cumulative with emphasis on 17.1, 18.2, 15.3, 27, 28, 29.1 and 29.3, and lessons from Cases 3 and 4)
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