Finance 100

The Finance 100 course is a foundational introduction to the world of finance, designed to equip students with the basic concepts, tools, and analytical skills needed to understand and navigate financial markets and institutions.

Core Concepts

The curriculum typically begins with the time value of money, emphasizing that a dollar today is worth more than a dollar tomorrow due to its potential earning capacity. This leads into present value and future value calculations, essential for evaluating investments and making informed financial decisions. Students learn to discount future cash flows to their present value, allowing for comparison of projects with varying timelines and risk profiles.

Risk and return are central to finance. Finance 100 explores different types of risk, including market risk, credit risk, and operational risk. Students learn how to measure risk using metrics like standard deviation and beta, and how to understand the relationship between risk and expected return – generally, higher risk should be associated with higher potential returns.

Financial statement analysis is another crucial component. Students learn to interpret key financial statements – the balance sheet, income statement, and cash flow statement – to assess a company's financial health, profitability, and liquidity. Ratios such as debt-to-equity, profit margin, and current ratio are used to benchmark performance and identify potential red flags.

Key Topics

The course delves into the basics of investing, covering different asset classes like stocks, bonds, and mutual funds. Students learn about market efficiency and different investment strategies, from passive index investing to active stock picking. The principles of portfolio diversification are emphasized, highlighting the importance of spreading investments across different assets to reduce risk.

Corporate finance topics are also covered, including capital budgeting, which involves evaluating potential investment projects using techniques like net present value (NPV) and internal rate of return (IRR). Students learn how companies make decisions about investing in new projects, acquiring other companies, and managing their capital structure (the mix of debt and equity used to finance operations).

Finally, Finance 100 typically introduces students to the financial markets, including stock exchanges, bond markets, and money markets. They gain an understanding of how these markets function, how securities are traded, and the role of financial intermediaries.

Learning Outcomes

Upon completion of Finance 100, students should be able to understand basic financial terminology, analyze financial statements, calculate present and future values, assess investment opportunities, and make informed decisions about personal and corporate finance. The course provides a solid foundation for further studies in finance and related fields, and equips individuals with the financial literacy necessary for success in both their personal and professional lives.