Foundations of Finance

01Defining Finance and the Financial System 02Valuation and Management: The Two Challenges 03Stocks, Flows, and the Five Cash-Flow Decisions 04Time, Risk, and the Six Principles of Finance 05How to Learn Finance: Practice and Study Habits Problem set0/10 Problem set 20/10 Practice∞

Present Value

01Information and Price: An Auction and Fannie Mae 02Who Pays for the Fannie and Freddie Guarantee?03What Counts as an Asset: Patents, Secrets, Brands 04An Asset as a Sequence of Dated Cashflows 05The Value Operator and the Cashflow Timeline 06Dates as Currencies: Building Net Present Value 07Discount Factors: Market Prices for Future Dollars 08A Worked Net Present Value and Its Assumptions 09The Opportunity Cost of Capital and Present Value Problem set0/10 Problem set 20/10 MIT problem set0/5 Practice∞

01Does the Currency Change an NPV's Sign?02Moral Hazard and Contagion: Where Bailouts Stop 03The NPV Rule at Work, and Choosing the Rate 04The Perpetuity: Why Cash Forever Is Worth C/r 05Reading the Rate Off a Perpetuity's Price 06The Growing Perpetuity, and When Growth Outruns r 07Building the Annuity from Two Perpetuities 08The Annuity Discount Factor and Mortgage Payments 09APR, the Effective Annual Rate, and Compounding Problem set0/10 Problem set 20/10 MIT problem set0/13 Practice∞

01Leverage: How a 10% Fall Becomes a 200% Loss 02Who Absorbs the Loss: Walking Away, Rate Cuts, Bailouts 03Last in Line: Chapter 11 and How Lehman's Equity Hit Zero 04Inflation vs. Time Value: Wealth and the Price Index 05Real Returns: Match the Discount Rate to the Cashflow Problem set0/10 Problem set 20/10 MIT problem set0/7 Practice∞

Last in Line: Chapter 11 and How Lehman's Equity Hit Zero

Why can a firm with the same people and the same skills be worth nothing nine months later?

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Your summary note

1. Asset valuation and who recovers
  Record that recovery hinges on the valuation placed on the assets, and write out both cases: marks at zero wiping out creditors alongside shareholders, marks near current prices leaving parties bruised but intact.
2. Filing for bankruptcy and the priority ladder
  State what filing declares about the firm's IOUs, the court-appointed supervisor over the orderly disposition, and the payment order that leaves shareholders last, with Lehman's $62 a share going to nothing in nine months.
3. Intangible value and the loss of counterparties
  Write that the people and skills were unchanged while the value went to zero, record what the withdrawal of counterparties leaves, and name Bear Stearns, toppled on a rumor, as the earlier case.
Attempt 1 of 2