1. Refresher on financial analysis

2. Cash management

3. Principles of trading on options

4. Capital budgeting: Net Present Value (NPV), Internal Rate of Return (IRR), etc.

5. Leverage effect principle

6. Cost of equity

7. Weighted Average Cost of Capital (WACC)

It provides a summary of the most important principles of corporate finance and prepares you to dive deeper into the world of Mergers and Acquisitions.

• the increase of the price of the underlying asset

• the decrease of the price of the underlying asset

• the volatility of the price of the underlying asset

• the stability of the price of the underlying asset.

Such principles are detailed in the following handout:

• During a given period, the underlying asset's spot price either goes up (and is mutiplied by a number equal to u), or goes down (and is multiplied by a number equal to d). Assuming k upward moves and n-k downward moves, the generic spot price of the underlying asset on expiration date is: u^(k) x d^(n-k) x S where k is a natural number taking its values in the [0,n] interval

where:

r = risk free rate

p = probability of an upward move during a period

Cu = premium of the call at the end of the next period, assuming an upward move

Cd = premium of the call at the end of the next period, assuming a downward move

p= probability of an upward move during a period

• Vega for the sensivitity to a change in the volatility of the underlying asset

• Theta for the sensitiity to a change in time to expiration

• Rhô for the sensivitity to a change in the risk free rate.The delta also enables to calibrate a hedging strategy. But, as the delta depends on the spot price of the underlying asset, which is changing everyday, the delta is also changing and the hedging has to be adapted accordingly.

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