Chapter 1: Introduction to corporate finance

I. The Corporate firm

1. Definition
- Is a legal entity that has a separate legal personality from its members
- Is an independent economic unit
- Do business to maximize the wealth of its owners
- Is the standard method for solving the problems encountered in raising large amounts of cash
2. Forms
Sole Proprietorship Partnership Corporation
One person owns 2 or more own Many members own
(Manager) (partners) (Shareholders)
Is the cheapest business to form, Are usually inexpensive and easy to Independent economic unit,....
no formal charter is required, and form Many names like public ownership,
few regulations must be satisfied limited liability, Joint Stock
Company,...
No corporate income taxes Personal tax on profits Corporate tax on profits + Personal
tax on profits
Unlimited liability for debts and General partners (Hop danh) have The shareholders’ liability is limited
obligations unlimited liability. Limited to the amount invested in the
partnerships (TNHH) have limited ownership shares
liability to the contribution each
has made
Life of business is limited by the life Is terminated when a general Readily transferred to new owners
of the owner partner dies or withdraws (but not and no limit to the transferability of
for a limited partner) shares
Equity is limited to the proprietor’s Difficult to raise large amount of Easy to raise fund and borrow cash
personal wealth cash
- Unlimited liability (maybe) - Expensive to form
- Limited life of the enterprise - Relate to many regulations
- Difficulty in transferring ownership and mobilizing funds and charters

II. The importance of cash flow

1. Cash flow timing
- A dollar today is worth more than a dollar at some future date
- There is a trade-off between the size of an investment’s cash flow and when the cash flow is received
2. Risk of cash flow
- The role of the financial manager is to deal with the uncertainty associated with investment decisions
- Assessing the risk associated with the size and timing of expected future cash flows is critical to
investment decisions

III. Corporate finance

1. Main corporate finance relationships
- Corporation – Government: Tax, fee, regulation, law
- Corporation – other economic units: purchase, lend, borrow, sell, exchange
- Inside corporation: welfare, salary, fine, incentives,...
- Corporation – owners: dividends, capital contribution
2. Capital budgeting
- The process of planning and managing a firm’s long-term investments (fixed assets like property, plant,
equipment)
- It involves identifying investment opportunities in which the value of cash flow generated by the asset
exceeds the cost of the asset.
3. Capital structure
- The mix of long-term debt and equity that the firm uses to finance its operation
- Equity comes from stocks (Common stock, preferred stock)
- Debt comes from long-term bonds
4. Goal of corporate finance
- The final goal is to maximize shareholders’ wealth which can be measured as the current value per share
of existing shares
 The investment decision: Invest in assets that earn a return greater than the minimum
acceptable hurdle rate
 The hurdle rate should reflect the richness of the investment and the mix of debt and
equity used to fund it
 The return should reflect the magnitude and the timing of the cash flow
 The financing decision: Find the right kind of debt for your firm and the right mix of debt and
equity to fund your operations
 The optional mix of debt and equity maximizes firm value
 The right kinds of debt matches the tenor of your assets
 The dividend decision: Return the cash to the owners of your business in case there are no ideal
investments
5. Financial management
- Financial management is to use financial resources in an effective way. In other words, it is to make
decisions and implement them to achieve the business goals of the corporation.

6. Principles of financial management

- Profitable: Find out profitable projects
- Trade-off expected return and risks: Find projects on the firm’s hurdle rate
- Time value of money: Money today is worth more than tomorrow
- Liquidity and solvency: Should keep a minimum necessary cash balance to ensure the ability of payment.
High liquidity is CA >> CL, high solvency is E>>L
 - Control agency problem: Control the possibility of conflicts of interests between these two parties.
- Impacts of taxation: Income tax affects net income

IV. Main financial decision in a corporation

1. Financing decisions
- Revolve around how to pay for investments and expenses
- There are two ways to finance an investment
Using a company’s own equity Raising money from external funds
Advantages - Lower risk - Lower cost of using
- Higher solvency - Easy to mobilize
Disadvantages - Higher cost of using - Higher risk
- More difficult to mobilize - Lower solvency
2. Investing decisions
- Revolve around spending capital on assets that will yield the highest return for the company over a
desired time period
- Need to find the right capital structure
- Must meet 3 main criteria:
 Maximize the firm’s value after considering the amount of risk
 Must be financed appropriately
 Cash must be returned to shareholder if not meeting 2 above criteria
Chapter 2: Financial statement & cashflow

I. The balance sheet

1. Definition
- Is an accountant’s snapshot of a firm’s accounting value at a specific point in time
- Assets = Liabilities + Equity
2. Liquidity
- Refers to the ease and quickness with which assets can be converted to cash
- Current assets are the most liquid and include cash and assets like accounts receivable, inventory, so on
that will be turned into cash within 1 year from the date of the balance sheet
- Fixed assets are the least liquid kind of assets, including tangible fixed assets and intangible fixed assets
like goodwill, brand, so on
- The more liquid a firm’s assets, the less likely the firm is to experience problems meeting short-term
obligations.
- Liquid assets frequently have lower rates of return than fixed assets
3. Debt versus Equity
- Liabilities that are obligations of the firm that require a payout of cash within a stipulated period involve
contractual obligations to repay a stated amount of interest over a period.
- Bondholders/ Creditors generally receive the first claim on the firm’s cash flow.
- Stockholders’ equity is a claim against the firm’s assets that is residual and not fixed.
4. Value versus Cost
- The accounting value of a firm’s assets is frequently referred to as the carrying value or the book value of
the assets. Under GAAP, accountants record the assets at cost.
 - Market value or fair value is the price at which willing buyers and sellers would trade the assets. Job of
CFO is to create value for the firm that exceeds its costs.
Book Value Market value
Advantages - Fixed, unchangeable - Easy to trade without contracts
- Represent the real value
Disadvantages - Need contractual trade - Changeable
- Not represent the real value - Depending on market
5. Net Working Capital
- NWC = CA – CL
- Is positive (CA > CL), leading to high liquidity, and the cash that will become available over the next 12
months will be greater than the cash that must be paid out.
- Change in NWC is to find out the investment in fixed assets
- Change in NWC is usually positive in a growing firm.

II. The income statement

1. Definition
- Measures performance over a specific period
- Income = Revenue – Expenses
- Operating income = Operating revenues – COGS – Expenses – Depreciation
- Earning before interest and taxes (EBIT) = Operating income + Other income
- Pretax income (Non-operating income) = EBIT - interest expense
- Net income = Pretax income – Taxes = Addition to retained earnings + Dividends
2. General Accepted Accounting Principles (GAAP)
- The matching principle of GAAP dedicates that revenues be matched with expenses
- Thus income is reported when it is earned, even though no cash flow may have occured
3. Noncash items
- There are several noncash items that are expenses against revenues but do not affect cash flow
 Depreciation is the most apparent. No firm ever writes a check for “depreciation”
 Another noncash itmes is deferred taxes, which does not represent a cash flow
 Thus, net income is not cash
4. Time
- In the short run, certain equipment, resources, and commitments of the firm are fixed, but the time is
long enough for the firm to vary its output by using more labor and raw materials
- In the long run, all costs are variable
- Financial accountants typically classify costs as product costs form period costs
5. Cost
Fixed costs Variables costs
Costs that will not change due to fixed commitment Costs that will change as the output of the firm
Ex: bond interest, overhead, property taxes,...
Ex: raw materials, wages for laborers,...
Product costs Period costs
Are the total production costs incurred during a Are costs that are allocated to a time period,
 period and recorded on the IS as COGS. including selling, general, administrative expenses
Ex: President’s salary
Ex: raw materials, direct labor, manufacturing
overhead
6. Corporate tax
- Is the tax imposed on net profits
- There are 2 types:
 Progressive tax systems have tiered tax rates that charge higher-income firms higher percentages
of their income.
 Flat tax system tier tax rate the same for all income levels
- The one thing we can rely on with taxes is tat they are always changing
- Marginal tax rate = The rate paid on next dollar of income
- Average tax rate = The tax liability/ Taxable income
- Other taxes

III. The Cash flow statement & Management

1. Cash flow of the firm
- The most important item that can be extracted from financial statement is the actual cash flow of the firm
- Statement of Cash flow has three components including cash flow from operations, investing and
financing
- CF(A) = CF(B) + CF(S)

Cash flow of the Firm

- EBIT = Revenues – Expenses = Sales – Expenses (Costs)
- Operating CF = EBIT + Depreciation – Taxes
- Capital spending = Purchases of fixed assets – sales of fixed assets + Depreciation
- Additions to NWC
- CF of the Firm = Operating CF – Capital spending – Additions to NWC

Cash flow of Investors in the firm

- Debt = Interest payments + Retirement – Debt financing
- Equity = Dividends + Repurchases of equity – paid-in surplus – New equity financing
2. Cash flow management
- As it simpliest, cash flow management means delaying outays of cash as long as possible while
encouraging anyone who owes you money to pay it as rapidly as possible.
- Cash flow can be managed through 4 steps:
 Measuring cash flow
 Improving receivables
 Managing payables
 Surviving shortfalls
Chapter 3: Discounted Cash Flow Valuation
 IV. Interest and interest rates
- Interest in general is the cost of borrowing money
- An interest rate is the cost stated as a percent of the amount borrowed (principal) per period of time,
usually one year.
1. Simple interest
- Is calculated on the original principal only
- Accumulated interest form prior period is not used in calculations for the following periods
- Simple interest payment= p + p*i*n
2. Compound interest
- Is calculated each period on the original principal and all interest accumulated during past periods.
- Compound interest payment = p * (1+i)n

V. Future values and Present values

1. Future value
- Is the value of an asset or cash at a specified date in the future that is equivalent in value to a specified
sum today
- FV = CF0 * (1+r)T
2. Present value
- Is value today of one or many future cash flows
- PV = CFt / (1+r)t

VI. Simplifications for different types of cash flow

1. Annuity
- A stream of constant cash flows that lasts for a fixed number of periods

- Annuity due from today

- Period t years, but first payment after n years

PV1 =

PV0 = PV1/ (1+r)n-1

2. Growing annuity
- A stream of cash flows thats grows at a constant rate for a fixed number of periods

3. Perpetuity
 - A constant stream of cash flows that lasts forever

4. Growing perpetuity
- A stream of cash flows thats grows at a constant rate forever

VII. Loan amortization (Khoản nợ khấu hao)

- An amortized loan require the borrower to repay parts of the loan amount over time
- The process of providing for a loan to be paid off by making regular principal reductions is called
amortizing the loan
 The borrower pay the interest payment + some fixed amount each period
Chapter 4: Investment appraisal

I. Net present value (NPV)

- Is the difference between the present value of cash inflows and the present value of cash outflows
- NPV compares the value of money today to the value of that same money in the future taking inflation
and returns into account.
- RULE:
 All projects which have a positive NPV should be accepted while those that have negative should
be rejected
 If funds are limited and all positive NPV projects cannot be initiated, those with the high
discounted value should be accepted.

II. Internal rate of return (IRR)

- Is the interest rate (discount rate) that will bring a series of cash flows to NPV of zero.

- RULE:
 IRR > Cost of capital  Accept
 IRR < Cost of capital  Reject
- NPV and IRR are formally equivalent, but the IRR rule contains several pitfalls
 Pitfall 1: Investing or Financing
Not all cash-flow streams have NPVs that decline as the discount rate increase.
 Pitfall 2: Multiple rates of return
There is double change in the sign of the cash-flow stream
 Choose alternative IRR at second year
 Pitfall 3: Mutually exclusive projects
 Choosing from among several alternative ways of doing the same job or using the same facility 
IRR rule can be misleading
 Make an incremental flow
 Project new = Project greater NPV – Project greater IRR
 IRR Project new > Cost of capital  Accept Project greater NPV
IRR Project new < Cost of capital  Accept Project greater IRR
 Pitfall 4: More than one opportunity cost of capital

III. Payback period

- Counting the number of years it takes before the cumulative cash flow equals the initial investment
- RULE:
 All other things being equal, the better investment is the one with the shorter payback period
 Normally, a project should be accepted if its payback period is less than some specified cut-off
period
- DRAWBACKS:
 It ignores the time value of money
 It ignores any benefits that occur after the payback period and therefore does not measure
profitability
 Used by large, sophisticated firms when making relatively small decisions

IV. Discounted Payback

- Occasionally companies discount the cash flows before they compute the payback period
- The discounted payback period rule will never accept a negative NPV project

V. Accounting Rate of Return (ARR)

- Is an accounting method used for the purposes of comparison with other capital budgeting calculations,
such as NPV, PB period and IRR.
- ARR = Average Profit / Average Investment
- ARR compares the amount invested to the profits earned over the course of a project's life. The higher
the ARR, the better.
- DRAWBACKS:
 It ignores the time value of money
 It uses operating profit rather than cash flows

VI. Profitability Index (PI)

- Attempts to identify the relationship between the costs and benefits of a proposed project.
PV of Future Cash Flows
- The PI ratio =
Initial Investment
- The profitability index rule states that the ratio must be greater than 1.0 for the project to proceed
- The profitability index rule is a variation of the NPV rule.
 if NPV > 0, the PI > 1
 if NPV < 0, the PI < 1
- DRAWBACKS: Being a ratio
 It ignores the scale of investment
  It provides no indication of the size of the actual cash flow

Chapter 5: Bond valuation

I. Bond and bond valuation

1. Definition
- From investor: Bonds are investment securities where an investor lends money to a company or a
government for a set period of time, in exchange for regular interest payments.
- From issuers: Bonds are financial instruments for raising funds (normally in long term)
 Why issuing bonds?
Issuing bonds is less expensive due to lower interest rate while maybe longer maturity
Less restrictive than borrowing from bank due to not compulsorily having debt covenants  Legally
freely issuing bonds for corporate performance targets
2. Bond features
- Debt securities: Investors who buy bonds become the debt holders (creditors) and have rights to receive
periodical interest plus principal timely
- Face value (Nợ gốc): par value or nominal value, is the initial principal, the amount of money the bond
will be worth at maturity (Not include inflation, opportunity cost and time value of money)
- Coupon rate: the annual interest rate paid on a bond, expressed as a percentage of the face value and
paid from issue date until maturity  Periodical fixed-value coupon payments
- Maturity: the lifetime of the bond
- Yield to maturity: the required market interest rate on the bond is calculated by
Yield to maturity = Current yield + Built-in gain/ Built-in loss
- Current yield: is the amount of money is calculated by
Current yield = the annual coupon/ price
3. Bond valuation
- Bond value is the sum of present value of expected future cash flows from the bond

- Bond value changes as yield to maturity changes

+ Coupon rate = YTM  Price = Par value (par bond)  investor invests in any instruments as the
interest rate is the same
+ Coupon rate > YTM  Price > Par value (Premium bond)  Investor preferred invests in this bond as
high market interest rate and will receive a premium payment (capital gains)
+ Coupoun rate < YTM  Price < Par value (Discount bond)  Investor invest in other instruments with
higher market rate, if he invested, he will receive a capital loss or a discount payment
- Interest rate risk: Base on the sensitivity of interest rate as well as the line connecting of bond value with
interest rate
All other things be equal
 + The longer the time to maturity, the greater the interest rate risk
Longer-term bonds have more interest rate sensitivity (Steeper slope of the line)
+ The lower the coupon rate, the greater the interest rate risk
The bond with higher coupon has a larger cash flow early in its life

II. Government and corporate bond

1. Corporate bond
a. Perpetual bond

b. Corporate bond (Vanilla bond)

- With specific maturity date and coupon
- Paying a fixed coupon rate periodically
- Repay principal and retire the bonds at maturity

c. Ze
ro-Coupon bond
- Pays no interest and trades at a discount to its face value
- The entire YTM comes from the difference between the pruchase price and the par value
2. Government bond
a. Treasury notes and bonds (T-bills)
- Treasury issues
- No default risk
- Coupons are exempt from state income taxes  Tax deductible
b. Municipal notes and bonds
- State and local governments issues
- Varying degree of default risk
- Coupons are tax deductible
- Very attractive to high-income, high-tax braacket investors
- The yields are much lower than the yields on taxable bonds

III. Inflation and interest rates

1. Inflation
- The Fisher Effect
(1+R) = (1+h) (1+r)
R is nominal rate
h is expected inflation rate
 r is real rate
2. Determinants of Bond yields (Measures of risks)
a. Interest rate risk
b. Credit risk

Chapter 6: Stock valuation

I. The Present value of common stocks

- The value of any asset in the PV of its expected future cash flows

- Stock ownership produces cash flows from: Valuation of different types of stocks
- The price of a share of common stock to the investor is equal to the present value of all of the expected
future dividends

- Case 1: Zero growth (Constant dividend)

Div1 = Div2 = ... = Div
Using Perpetuity formula

- Case 2: Constant growth

Dn+1 = Dn*(1+g)
Using Growth Perptuity formula

- Case 3: Differential growth

Dividends will grow at different rates in the foreeable future and then will grow at a constant rate

thereafter (unusual growth >> constant growth)

For example: Suppose a firm is expected to increase dividends by 20% in one year and by 15% for 2 years.
After that, dividneds will increase at a rate of 5% per year indefinitely. If the last dividend was 1$ and the
required return is 20% what is the price of stock?
II. Estimates of parameters in the Dividend Discounted Model (DDM)
- Growth rate g is also dividend growth rate or capital gain yields
g = Retention ratio x Return on retained earnings (ROE)
= Change in future expected earnings / Total reported earnings
= (Retained earnings * ROE) / Total reported earnings
ROE is an appopriate estimate for future returns
- Dividend yield (Div/P0) is expected cash dividend in the future by the current price
- Discount rate R (required rate of return)
R = nominal risk-free rate (Lãi suất danh nghĩa phi rủi ro) + Default-risk premium (Phần bù rủi ro vỡ nợ) +
Liquidity-risk premium (Phần bù rủi ro thanh khoản) + Maturity-risk premium (Phần bủ rủi ro đáo hạn)
Nominal risk-free rat = Real risk-free rate + Expected inflation rate
R = Dividend yield + Capital gain yield

- Expected earnings in one year will be E1 = E0 * (1+g)

III. Comparables
- Comparables are used to value companies based primarily on multiples

1. Price to Earnings ratio (P/E)

- P/E is the share price divided by the earnings per share for a company
- P/E shows the potetion of the stock
P/E = 30  Investors are willing to pay 30 times its last public earnings
- P/E is a function of three factors:
+ The more significant growth opportunities, the higher P/E ratios
+ Low-risk stocks are likely to have higher P/E ratios
+ Firms following conservative accounting practices will likely have high P/E ratios
- Valuation
Value = P/E (benchmark) * Post-tax Earnings
Forward P/E = Current market price/ EPS1 (expected) = Payout rate/ (R-g)
Trailing P/E = Current market price/ EPS0 (Occurred) = (1+g0) * Forward P/E
EPS = (Net income – Dividend for preffered) / Outstanding number of stock
 2. Enterprise Value ratio (EVM)
- EVM = EV/ EBITDA
EV = Market value (of Equity + Preferred shares + Debt + minority interest) – Cash & cash equivalent
EBITDA = Earnings before interest rate, taxes, depreciation and amortization
- EV is a measure of a company’s total value, often used as the alternative to market capitalization

Chapter 7: Risk and Return

I. Returns
1. Realized return
- Calculated after the outcome is known

- Dollar return is the sum of the cash received and the change in value of the asset, in dollars (cung cấp số tiền
tuyệt đối)

Total dollar return = Dividend + Change in market value (Capital gain)

Total cash if stock is sold = Initial investment + Total dollar return

= Proceeds from stock sale + Dividends

Percentage returns = Dividend yield + Capital gain yield (Cung cấp tỷ suất sinh lời)

- Holding Period Return là lợi suất thu được trong một khoản thời gian nắm giữ

In 1 period

In numerous periods
- Arithmetic Average returns (LN trung bình cộng) là lợi nhuận trung bình trong 1 số kỳ nhất định
- Geometric Average returns (LN trung bình nhân) là ước lượng không chệch của giá trị lợi nhuận trung
bình – Tỷ suất sinh lời bình quân (lãi kép) qua các kỳ

- Risk-free return: Return from the security that is free most of the volatility we see in the stock market
(nominal risk-free rate as including inflation) (eg T-bills)
- Excess return on the risky asset: The differency between risky return and risk-free returns
- Equity risk premium: The average excess return on common stocks, the additional return from bearing
risk
Equity risk premium = Average return – Average free-risk return (Slide 9)

2. Expected return
- Estimated or predicted before the outcome is known
- The weighted average of the probability distribution of posible outcomes

Ri is the ith possible outcome

Pi is the probability of the ith outcome
N is the number of possible outcome
 The higher the probability of unfavorable events occur, the higher expected rate of return would be
to compensate
- Theo CFA: Expected return là lợi nhuận danh nghịa được điều chỉnh theo lãi suất phi rủi ro, lạm phát kỳ

vọng và phần bù của rủi ro kỳ vọng, được đo lường bằng

Rrf là lãi suất phi rủi ro
E(R) là lợi nhuận kỳ vọng
E( π ) là tỷ lệ lạm phát kỳ vọng
E(RP) là phần bù rủi ro

II. Risk
1. Definition
- Risk in finance is defined in terms of variability of actual returns on an investment around an expected
return, even when those returns represent positive outcomes
+ Risk on bond: the probability of issuer default on interest payments
+ Risk on share: The probability of issuers fail to pay expected dividends
 Share pprice falls
 The higher risk of unfavourable events occur, the higher expected return would be to compensate

Risk Uncertanty
- Sự biến động xung quanh giá trị expected
return
- Dự đoán trước được các kịch bản xảy ra
- Dự đoán trước được các kịch bản xảy ra
(outcomes)
- Không gán được xác suất
- Ước lượng và gán xác suất xảy ra cho từng
ước lượng (assign probability to each
outcome)

2. Types of risks
- Systematic risk
  Influences a large number of assets
 A significant political event could affect several of the assets in your portfolio
 It is virtually impossible to protect yourself against this type of risk
 Caused by interest rate, exchange rates, inflation, regulations, ...
- Unsystematic risk
 Affects a very small number of assets
 News that affects a specific stock such ass sudden strike by employees
 Diversification is the only way to protect yourself from unsystematic risk
 Caused by problems in particular firm or industry

3. Measures
- The measures of risk we are discuss are variance and standard deviation
+ The SD is the standard statistical measure of the spread of a sample, and it will be the measure we use
most of this time
+ Its interpretation is facilitated by a discussion of the normal distribution
- Variance (σ2) is a measure of the dispersion of a set of data points around their mean value or the

variability from an average (volatility)

Deviation = Ri – E(R)
+ Đo lường sự rủi ro
+ Đo lường sự biến động của lợi nhuận xung quanh giá trị trung bình (lợi nhuận kỳ vọng)
+ Phương sai càng cao  Độ biến động của tài sản càng nhiều
- The SD express the level of dispersion of individuals from the mean (expected rate of return)

+ Low Std: individual rates of return tend to be close to expected rate of return
 Tight dispersion  Lower risk
+ High Std: individual rates of return tend to be spread out from the mean
 Wide dispersion  Higher risk
3 bước đánh giá rủi ro của 2 tài sản
B1: Tính expected return E(R)
B2: Tính Std
B3: Nếu E(R) của 2 tài sản khác nhau thì tính thêm thêm CV và lựa chọn tài sản có CV nhỏ hơn
Hệ số biến thiên CV = Std/ E(R)

VD:

Stock A Stock B

Var = 0,5*(40% -15%) + 0,5*(-10%-15%) Var = 0,5*(10% -30%) + 0,5*(50%-30%)

= 0,0625 = 0,04

 Std = 25%  Std = 20%

 CV = Std/ E(R) = 25%/ 15% = 1,6  CV = Std/ E(R) = 20%/30% = 0,67
 Choose Stock B due to lower risk
4. Diversification
- Portfolio is a combination of different assets or securities to diversify investment rather than put all
resources for only one asset
- Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive
performance of some investments will neutralize the negative performnace of others.
- In a portfolio
+ Some risk can be cancelled out by others  Portfolio risk reduced
+ Some risks can be facilitated by others  Portfolio risk increased
 Variation among these individual stocks was reduced through diversification

Expected return of portfolio:

Trong đó: E(Rp) là tỷ suất sinh lời kỳ vọng

W1,w2 là tỷ trọng đầu tư các danh ngạch tài sản

R1, R2 là tỷ suất sinh lời kỳ vọng của các danh ngạch tài sản

Expected risk

In specific formula:

 Mối tương quan của lợi nhuận càng thấp thì lợi ích giảm thiểu rủi ro đến từ việc kết hợp 2 tài sản
trong danh mục đầu tư càng lớn
 Đa dạng hóa chỉ ảnh hưởng đến rủi ro, không ảnh hưởng đến lợi nhuận của danh mục

Hiệp phương sai Covariance

- Đo lường sự biến thiên cùng nhau của 2 biến theo thời gian
- Hiệp phương sai không có giá trị giới hạn

Trong đó: RA,i, RB,i là tỷ suất sinh lời của 2 tài sản trong thời kỳ i

E(RA), E(RB) là tỷ suất sinh lời kỳ vọng của 2 tài sản trong n kỳ

n là số kỳ

Ta có :

 Với COV1,2 < 0: Cả hai biến có mối quan hệ nghịch biến với nhau
 Với COV1,2 = 0: Cả hai biến không có mối quan hệ tuyến tính với nhau
 Với COV1,2 > 0: Cả hai biến có mối quan hệ đồng biến với nhau
Hệ số tương quan Correlation
- Biểu thị mối liên hệ tuyến tính giữa hai tài sản với nhau

- Giá trị dao động từ -1 đến 1

Ta có :
  Với ρAB = 1: Two variables move up and down in perfect synchronization  The risk of the whole
portfolio will be higher
 Với ρAB = - 1: Two variables always move in exactly opposite directions  The risk of the whole
portfolio will be lower  Sự kết hợp tốt nhất bởi nếu 1 cổ phiếu giảm, thằng còn lại chắc chắn
tăng
 Với ρAB = 0: Two variables are not related to each other, that is, changes in one variable are
independent of changes in the other
 Với -1< ρAB < 1: Under such conditions, combining stocks into a portfolio reduces risk but dóe not
eliminate it completely

Hiểu đơn giản là không nên mua những thằng cổ phiếu cùng trong 1 ngành, bởi nó có sự tương quan
khá lớn, nếu 1 DN trong ngành bị sập sẽ kéo giá của toàn ngành đi xuống (Như vụ BĐS, hoặc NHTM
SCB, ACB)

III. Capital market theory

5. Definition
- Đường phân bổ vốn (CAL): Một đường đại diện cho sự kết hợp có thể có của