to learn h to valie assessts any kind to enable you to make sound decision to understand the environment and public

policy to motivate you to learn more finance.

everything and nothing,

economics is mother discipline of fincnace accounting ( langualge) algebra and statistics ( need it for everything)

curiosity and an attitude

WHY Finance? 1. Finance is study of value. Value is what i believe all humans are after. Finance is about moneyMoney is just a tool. And finance is a more, much more fundamental understanding of value. 2. Value creation has 2 key components: time and uncertainty. The key element of the time and uncertainty is that, just time alone is tough to understand. But when you throw in time and uncertainty, it becomes a little bit more complicated 3. (almost) everything can be valued using the framework we will learn Remember that even though money will be used across as the most obvious way to value things, values doesnt come necessary only from money. 4. It is a way of thinking and set of tools that reflect this way of thinking. 5. Most importantly, the most applicable decision making system. Much more transparent, much more value based.p All of us are making decisions all the time and it is so applicable. It is one aspect of economics which is another discipline, which is extremely applicable. CONTENT/ SYLLABUS: Content structure over 10 weeks ( Syllabus on the website):

Two weeks on Time Value of Money: understanding how value benefits/costs occurring over time ( no uncertainty) Two weeks on Decision Criteria: Understanding how to make value-enhancing decisions Two weeks on Bonds and Stocks: Understanding the two ways of financing any idea Two weeks on Uncertainty & Risk: Covering the role and measurement of risk in assessing value One week: Putting it all together Last week: Review and final exam

This is ten-week class and the syllabus is on the website. THE PROCESS Important features of process: Class will run synchronously one week at a time. Main method of content delivery: Videos, one per week, broken up into bite-size pieces Supporting materials: a list of textbooks with relevant chapters highlighted in syllabus and some minimal notes. Assessments: assignments every week, with a final, all graded by computers Peer-to-Pear Learning: Very important, no direct interaction with faculty or teaching assistants feasible.

THE PHYLOSOPHY: Important elements of the course philosophy: How does learning happen? Learning happens in two hour blocks, Learning happens when you are happy, you want to listen, not only the person taking in front of you, but also you want to listen to yourself. You are the center of learning Where does learning happen? In an organic way, where online class allows you flexibility. What is the role(s) of the teacher/faculty? Teacher like someone who shows you the beauty of finance. Who show and motivates you . Not to spoon-feed u Emphasis on why things work their way they do? What is the role(s) of student? Student is the center of learning. To being the center, comes the responsibility to learn. Learn for your own. Do the work by yourself Who is ultimately responsible for your learning? You student Devote 5-10 hours a week Is the class really free?

The Essense of Decision Making (Virtually) every decision involves time and uncertainty. Very important to understand the impact of just the passage of time on a decision.

Understand just the impact of time on a decision and thats what we call time value of money. We will first assume no uncertainty to internalize the time value of money

Some Terminology: PV = Present Value ($): means the value of anything today, present as of now. FV = Future Value ($) means the value of future. N = number of Periods (#) r = Interest Rate (%) > 0 ( assumption) Book Theory of Interest written in 1930 by Irving Fisher.

Importance of Time Lines !

Week 2: Multiple Payments: Annuities An special case of multiple payments: annuities ( C or PMT) Note: C stands for Cash, PMT stands for Payment

Mt khong vay, s dc tr bng tin mt trong n ln. Mi ln s tr 1 khong tin l C. FV = C[ (1+r)^n-1 . +1]

PV of an Annuity: Example I How much money do you need in the bank today so that you can spend $10,000 every year for the next 25 years, starting at the end of this year, suppose r = 5% PV of an Annuity: Example 2: You plan to attend a business school and you will be forced to take out $100,000 in a loan at 10%. You want to figure out your yearly payments, given that you will have 5 years to pay back the loan. Example 2: Loan Amortization ( tra dan no) Example II: Power of Finance !

Compounding Simple Interest Compound Interest You plan to attend a business school and you will be forced to take out $100,000 in a loan at 10% What are your monthly payments, given that you have 5 years to pay back the loan?

Perpetuities A perpetuity is simply a set of equal payment that are pay forever, with or without growth. Stock and Bond Bond is limited in majority Stock hopefully goes on forever.

Power of Perpetuities Suppose you are exactly 30 years old. You believe that you will be able to save for the next 20 years, until you are 50. For 10 years following that, and till your retirement at age 60, you will have a spike in your expense due to your kids college expenses, weddings, etc., and you will not be able to save. If you want to guarantee yourself $100,000 per starting on your 61st birthday how much should you save every year, for the next 20 years, starting at the end of this year. Assume that your investments are expected to yield 8% and you are likely to live till 80

Q1: http://www.zenwealth.com/BusinessFinanceOnline/TVM/OtherCompounding.html