Lessons
about the Structure of Finance
by
Thomas W. Downs, Second edition, © 2005. All rights reserved. Published by Pearson Custom
Publishing,
The video tutorials listed below are
intended for use exclusively by students enrolled in a course that requires the
textbook. The videos may not be otherwise used or distributed without express
written permission of Thomas W. Downs.
o Setting the calculator (3:52)
o Getting and installing Algogen© (6:28)
o
Running and using Algogen© (10:14)
o So just what is Finance? (1:28)
o The three sources of value (5:41)
o The corporate pyramid (7:19)
o Subdisciplines and certifications (2:41)
o The company cash flow cycle (8:43)
o Categorizing financial markets (4:12)
o Agency relationships (8:45)
o The company objective (5:20)
o Clones of the company cash flow cycle (13:14)
o Overview of flows, balances, and financial statements (10:19)
o Equity price-to-book ratios (6:03)
o Stock market capitalization (5:31)
o Stock market capitalization 2 (1:48)
o Streetbite: Mergers, acquisitions, and contests for corporate control Part 1 (12:12)
o Streetbite: Mergers, acquisitions, and contests for corporate control Part 2 (11:01)
o Merger Mechanics (13:37)
o Merger Mechanics 2 - Total wealth transfer (10:25)
o Merger Mechanics 3 (4:23)
o Streetbite: Initial Public Offerings (IPO) (10:51)
o Income statement basics (8:02)
o Merger mechanics and the PE ratio (6:52)
o Ratio categories (9:18)
o The shareholders ROR (3:14)
o Compute ROR from PB and income and PE (11:20)
o Overview of the Dupont decomposition (6:04)
o Use the Dupont decomposition to explain difference in ROE (9:27)
o Find shareholder's ROR given ratios and balance sheet (11:30)
o Streetbite on the New York Stock Exchange (9:40)
o Relation between ROE and ROR (6:00)
o Compare ROE and ROR from statements (11:45)
o Operating breakeven ratios, 1 (13:42)
o Operating breakeven ratios, 2 (6:01)
o Total breakeven ratios, 1 (7:33)
o Total breakeven ratios, 2 (8:01)
o Differential process for Stockholders' equity Part 1 (8:31)
o Differential process for Stockholders' equity Part 2 (5:41)
o Find shareholder ROR given income ratios and changing P/B ratio (10:10)
o Differential process for Plant, property, & equipment (PP&E) (8:05)
o SE, PP&E, and using Net equity issues to finance Capital expenditures, Part 1 (7:30)
o SE, PP&E, and using Net equity issues to finance Capital expenditures, Part 2 (9:41)
o Forecasting surpluses or deficits with cash (9:08)
o Motivation and example for balance sheet forecasting (12:03)
o EFN focuses on changes in TA and (TL + SE) (7:54)
o EFN with a target asset turnover (9:46)
o Natural growth rate dynamics - overview (3:48)
o Natural growth rate dynamics - g_internal (12:58)
o The internal growth rate and ROR (9:55)
o EFN with a target profit margin (9:13)
o Natural growth rate dynamics - g_sustainable (6:04)
o Natural growth rate dynamics - stability (7:36)
o Forecast TA given g_sustainable (7:43)
o Introduction to cash flow formulas (6:04)
o The cash surplus (1:49)
o The price-to-cash flow from operations ratio (14:05)
o Cash is the equalizer (12:30)
o Streetbite on venture capital (9:25)
o Streetbite on the discount rate and the Fed (10:50)
o The cumulative rate of return (3:14)
o The periodic rate of return and the arithmatic average ROR (6:23)
o The geometric average ROR (4:15)
o What is a basis point? (1:55)
o The difference between the geometric and arithmatic average ROR (6:10)
o Derivation of the lump-sum time value relation (6:59)
o The Rule of 72 finds the length of a doubling period (2:49)
o Using the calculator time value keys to find FV and periodic interest (7:46)
o Find balance after crediting of periodic interest (3:07)
o Find shortfall given target FV, target r, and actual r (4:47)
o Periodic components of time value: interest-on-interest and interest-on-principal (7:38)
o Intraperiod compounding of interest within a year (7:11)
o Use intraperiod compounding to find FV (3:47)
o Find actual APR given lump-sum surplus (5:46)
o PV of cheapest cost (11:00)
o APR v EAR (4:55)
o Find breakeven penalty to switch CD (8:11)
o Find breakeven APR to switch to CD (6:44)
o Inflation and time value (7:50)
o Apply inflation rule 4-3 (9:54)
o General time value (9:39)
o Find shortfall for mixed cash flows (10:23)
o Work with general time value (20:50)
o Constant annuity and FVIFA (10:30)
o Signage and the constant annuity (5:02)
o Find FV and total interest (5:36)
o Lumpsum followed by annuity (10:08)
o Find actual APR given savings surplus (8:52)
o FV given beginning balance (4:33)
o Annuity sandwiched between lumpsums (10:03)
o Present value and PVIFA (7:58)
o Guardian angel initial deposit (9:50)
o ROR and counteroffer (14:20)
o With PV FV and PMT watch signs (7:15)
o Perpetuities and endowment fund (5:44)
o Save young v. later (9:31)
o With PV FV and PMT find ROR for counteroffer (6:35)
o Find PMT that adjusts balance (6:20)
o Scholarships after savings plan (5:02)
o Length of drawdown period after savings plan (6:53)
o Size of withdrawals in retirement (6:08)
o Fixed payment, amortized loans, and payoff amount (8:49)
o Amortization 1 (6:47)
o Amortization 2 (10:20)
o Amortization 3 (10:37)
o Loan book v. market value (7:50)
o Payback period introduction (8:51)
o Simplest payback period (2:51)
o Payback for bank recovering mortgage (3:16)
o IRR Intro (7:40)
o IRR for a bank selling a loan (9:53)
o Refi payback (12:35)
o Refi IRR (7:54)
o Refi interest savings (15:16)
o NPV Introduction (5:34)
o Refi NPV (8:25)
o NPV is economic profit (9:49)
o Relation between NPV and IRR (7:35)
o Compare NPV profiles - intercepts (10:16)
o Compare NPV profiles - COR (9:55)
o Interpreting the COR (3:09)
o Compare ranking (10:28)
o Incremental CF for perpetuity (11:39)
o The depreciation tax shield (5:09)
o Mixed CF with SL (9:27)
o Bond Trading (6:02)
o Bond Notation (8:05)
o Bond current yield (3:25)
o Price and YTM (9:40)
o Count years for pricing (5:47)
o Counteroffer bond price (6:55)
o Future bond price (11:21)
o Components of YTM (2:49)
o Premium vs. discount bond (4:05)
o Scientific amortization (1:42)
o Horizon analysis (10:05)
o Find components of YTM (7:55)
o Find change in capital gains yield (13:46)
o The yield curve (3:16)
o Riding the yield curve - motivation (4:26)
o Riding the yield curve - problem (11:47)
o Introduction to Part 2 (9:54)
o Pension plans (14:56)
o Savings vehicles (9:12)
o Buy side - Insurance and banks (12:33)
o What is a mutual fund - an overview (5:40)
o What is a mutual fund - categories (6:00)
o ABS and open market securities (5:11)
o Expected and required returns (3:55)
o Historical record of returns (5:26)
o Overview of Efficient markets hypothesis (10:47)
o ROR and risk and EMH (4:51)
o Implications of the EMH (10:08)
o Dominance (5:28)
o Primal risk classes (4:25)
o Sources of idiosyncratic risk (5:11)
o The E(ROR) formula (6:54)
o The standard deviation (3:49)
o State outcomes 1 - dominance or tradeoff (11:18) [Example 5]
o State outcomes 2 - portfolio risk and return (7:27)
o State outcomes 3 -actual risk and DB (11:09)
o Unequal probs - portfolio risk-return (9:46)
o Dominance or tradeoff given equally likely outcomes (6:12)
o Equal probs - dominance or tradeoff (8:44)
o Find actual portfolio risk and return given equally likely outcomes (8:31)
o Find portfolio DB given equally likely outcomes (5:12)
o Diversification benefits and correlation (7'21)
o