Fundamentals of Finance

In this course, you’ll learn the basic fundamentals of corporate finance. Based on the pre-term qualifying courses for Wharton MBA students, Professor Jessica Wachter has designed this course for learners who need a refresher in financial concepts, or for those who are learning about corporate finance for the first time. You’ll identify foundational concepts in corporate finance, such as NPV, Compound and Simple Interest, and Annuities versus Perpetuities. You’ll also learn how to apply the NPV framework to calculating fixed-income valuation and Equity, using hypothetical examples of corporate projects. By the end of this course, you’ll have honed your skills in calculating risk and returns to optimize investments, and be able to assess the right set of financial information to achieve better returns for your firm.

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Syllabus

Syllabus - What you will learn from this course
Week 1
Module 1 - Introduction and Net Present Value (NPV)
This module was designed to give you foundational knowledge of corporate finance and the Net Present Value (NPV). You’ll identify the definition of both Present Value and NPV, why it works, and how to calculate the NPV. You’ll learn key concepts such as Separation Theorem, whether corporations should follow the same rules of NPV as individuals, and what are reasonable assumptions to make when calculating NPV. You’ll compare Compound versus Simple Interest, define important concepts such as Annuities and Perpetuities, and analyze Annual Percentage Rate (APR) and Effective Annual Interest Rate (EAR). By the end of this module, you’ll gain a better understanding of the fundamental concepts in corporate finance as well as broader knowledge regarding the factors that go into a firm’s most critical decision-making.
Week 2
Module 2 - Fixed Income Valuation
In this module, you’ll examine fixed income valuation and delve deeper into the yield curve. Using the basic definition of bonds, you’ll be able to identify zero coupon bonds and calculate the return on those bonds. You’ll also discuss the differences between Yield to Maturity and Holding Period Returns, evaluate your investments, and be able to answer the question: “What does return on investment mean?” Through analyzing the Yield Curve, you’ll assess the opportunity cost of receiving money at various events in the future and accurately value investments. By the end of this module, you’ll be able to describe what a bond and zero coupon bond is, calculate the return on those bonds, and calculate a Yield Curve to better assess the value of your investments.
Week 3
Module 3 - Equity Valuation
In this module, you’ll examine how to determine the value of stocks using present value methods. You’ll define what Equity is and develop an understanding of the important difference between fixed-income securities, such as bonds, and equity cash flows. You’ll discover the standard approach in valuing equity through its cash flow and how the principle of using multiples (such as price-earnings ratio) to value equity all comes from valuing equity as a stream of cash flows. By the end of this module, you’ll gain a better understanding of the theoretical basis behind applications of equity valuation and create models that determine dividend growth.
Week 4
Module 4 - NPV vs. Internal Rate of Return
This module was designed to show you the difference between NPV and Internal Rate of Return (IRR). You’ll first explore both Internal Rate of Return and how it compares to the NPV, then debunk some of the common assumptions about IRR that may seem unrealistic when examined closely. Using hypothetical examples of projects, you’ll compare the values of NPV and IRR and what to do when they agree or disagree with each other. By the end of this module, you’ll gain a better understanding of the difference between NPV and IRR, plus be able to determine when to make the critical call on which value to accept or reject when making important decisions within your firm.
Week 5
(Optional) Additional Course Topics and Resources

FAQ

When will I have access to the lectures and assignments?

Access to lectures and assignments depends on your type of enrollment. If you take a course in audit mode, you will be able to see most course materials for free. To access graded assignments and to earn a Certificate, you will need to purchase the Certificate experience, during or after your audit. If you don't see the audit option:

The course may not offer an audit option. You can try a Free Trial instead, or apply for Financial Aid.

The course may offer 'Full Course, No Certificate' instead. This option lets you see all course materials, submit required assessments, and get a final grade. This also means that you will not be able to purchase a Certificate experience.

What will I get if I subscribe to this Specialization?

When you enroll in the course, you get access to all of the courses in the Specialization, and you earn a certificate when you complete the work. Your electronic Certificate will be added to your Accomplishments page - from there, you can print your Certificate or add it to your LinkedIn profile. If you only want to read and view the course content, you can audit the course for free.

Is financial aid available?

Yes. In select learning programs, you can apply for financial aid or a scholarship if you can’t afford the enrollment fee. If fin aid or scholarship is available for your learning program selection, you’ll find a link to apply on the description page.

Reviews

Quizzes are tough, but great learning. Only suggestion will be to offer more support for quiz answers

It was relatively easy to understand, however, I think there were parts in the quiz that didn't refer back to what we learned. For example, why is c/r valid if it is a perpetuity?

Quote comprehensive but the solution to quiz questions should be provided in order to know the correct way of solving and approaching the question

Some exercises could use a few hints, aside from that looks very good. The notes are good even for someone who is very rusty in algebra.