3 Kinds of Decisions & Basic Rules – 15 Min

Investment Decision Basics – 15 Min

1. Risk and Return

2. Hurdle Rates and Cash Flows

3. Why use WACC

4. Introducing CAPM

5. Why CAPM is the best

Risk free Rate – 15 Min

1. Germany vs Italy

2. 10 year vs 30 year

3. Real vs nominal

Equity Risk Premium – 15 Min

1. Market Return

2. Historical vs Implied ERP

3. Which Market?

Beta – 30 Min

1. Regression Beta

2. Discretionary vs Non Discretionary Product

3. Operating Leverage and Financial Leverage – Levered and unlevered betas

4. Bottom Up beta – Weighted Average of Industry Betas

Cost of Debt – 15 Min

1. Why Interest Rate shouldn’t be used

2. Order of Preference – YTM, Credit Rating, Others

3. Other instruments – Preference Shares, Convertible Debentures etc.

WACC – 15 Min

1. Using correct weight – Book/Market Value

Cashflows – 30 Min

1. Relevant Costs and Relevant Revenue

2. Cashflow from Project – Operating Income, Depreciation, Working Capital, Capex (link with component accounting)

3. Return on Investment using IRR

4. Discounting – NPV vs IRR

5. Terminal Growth Rate

6. Return on Equity vs Cost of Capital

Financing Decision – 30 Min

1. Debt, Equity and Hybrids

2. MM Model and its flaws

3. Minimising Cost of Capital – Scenario Analysis

4. Determinants of Debt

   1. Tax

   2. Operating Risk

5. Which Debt

   1. Duration

   2. Fixed or floating

   3. Currency

Dividend Decision – 30 Min

1. What to do with surplus

2. Buybacks

3. Taxes

4. Level of Surplus Cash and investment opportunities

FCFF and FCFE – 30 Min

Overview of Remaining topics – 1 hour

1. Working Capital – Inventory, Receivables and Payables

2. Costing – Marginal, Standard etc.

3. Option Pricing

4. Forex

5. Ratio Analysis

6. Variance Analysis

7. Covering tough interview questions

8. Residual Doubts