This Corporate Finance course is split up into six sessions.

Each set of video lectures is

complemented by a required reading (a teaching note or a book chapter) that is just as
important as the video. The course material has been designed that you should first
watch the video and then work through the required reading, in that order.
The topics we are going to cover in the six sessions are:
1. Risk and Return: In this session we will discuss some basic but essential financial
concepts such as mean return, volatility, and beta. We will also learn how to apply them in
order to assess the performance of selected equity markets over the last decade.
2. Correlation and Diversification: In this session we will discuss correlation, another
essential financial tool, and its relationship to diversification, one of the bedrocks of modern
finance. We will also apply this concept and assess the benefits of combining two different
equity markets within a portfolio.
3. The CAPM and the Cost of Capital: In this session we will discuss how companies
assess their cost of debt, their cost of equity, and ultimately their cost of capital. We will
also discuss why this last concept is at the heart of many of the most important corporate
decisions.
4. Estimating the Cost of Capital An Application: In this session we will put to work all
the concepts discussed in the previous session by estimating the cost of capital of a
company. As usual, when putting theory into practice, a few complications arise and we will
discuss how to deal with them.
5. Project Evaluation: In this session we will discuss how companies routinely decide
whether or not to invest in projects. We will discuss the two tools most widely used for this
purpose, NPV and IRR, and apply them to the evaluation of an investment opportunity.
6. Corporate Value Creation: In this session we will discuss EVA, a tool widely used to
assess whether a company is creating or destroying value. We will also put this tool into
practice by estimating the EVA of two companies.
All required teaching notes and book chapters accompanying each session are provided
free of charge. We cannot provide the optional readings due to copyright restrictions.
The required readings that will complement the sessions are:

Session 1: IESE Technical Notes FN553E and FN555EIESE

Session 2: Technical Note FN558EIESE

Session 3: Technical Note FN559E

Session 4: Same as for the previous session (FN559E)

Session 5: The FT Guide to Understanding Finance, chapter 21

Session 6: The FT Guide to Understanding Finance, chapter 23

All the issues covered in this course are discussed in my two books, listed below.

The Essential Financial Toolkit: Everything You Always Wanted to Know About
Finance But Were Afraid to Ask.Palgrave Macmillan, 2011.

The FT Guide to Understanding Finance: A No-Nonsense Companion to Financial

Tools and Techniques. FT Prentice Hall, 2011.
These books are not required for the course. Both can be purchased online and doing so is
the responsibility of each student.* These books will enhance your learning but are not
necessary for completion of the course.
*The required readings are taken from Professor Estradas book, The Essential Financial
Toolkit: Everything You Always Wanted to Know About Finance But Were Afraid To
Ask (Palgrave Macmillan, 2011). If you wish to purchase the book at a 30% discount, you
can do so going directly to the Publishers page at Palgraves IESE page and enter the
promotional code PM16THIRTY at checkout. All of the optional readings are taken from
Professor Estradas book, The FT Guide to Understanding Finance: A No-Nonsense
Companion to Financial Tools and Techniques (FT Prentice Hall, 2011). If you wish to
purchase a copy of this book, we have organised a 30% discount which is automatically
applied by purchasing directly from the Publisher using this link at Pearson.
To practice your excel formulas, please use the Data for Practicing Calculations sheet to
practice your calculations at any time.