Dime en qué inviertes y te diré quién eres

Get Started. It's Free
or sign up with your email address
Rocket clouds
Dime en qué inviertes y te diré quién eres by Mind Map: Dime en qué inviertes y te diré quién eres

1. Rule 1 Only values at the same point in time can be compared or combined.

1.1. If it is in present value you don´t apply the formula

2. The timeline

2.1. A timeline is a linear representation of the timing of potencial cash flows.

2.2. 0---------1---------2

2.3. timeline help you visualize the financial problem.

2.4. Today is Date 0

2.5. X------>

2.6. ÷<------

2.7. NPV= PV(All project cash flows)

2.8. If the Cf is not in the same time you can't compare them.

3. Time Travel

3.1. Rule 2 To move a cash flow forward in time, you must compund it.

3.1.1. Future Value of a cash flow.

3.1.1.1. FVn= Cf * (1+r)^n

3.2. Rule 3 To move a cash flow backward in time, you must discount it.

3.2.1. Present Value of cash flow.

3.2.1.1. PV= Cf ÷ (1 +r)^n

3.2.1.1.1. PV= Cf/(1÷r)^n

4. Rate

4.1. Depends the place you invest

5. Compounding

5.1. number of time periods increases the future value increases.

5.1.1. Co + Cf1 * (1+r)^1 + Cf2 * (1+r)^2 + --- + Cfn + (1+r)^n

5.2. Interest on interest

5.3. Increasing rate since there is more interest on interest

5.3.1. Co + Cf1/(1+r)^1 + Cf2/(1+r)^n --- + Cfn/(1+r)^n

5.4. Combing the project with borrowing or saving

6. Net Present Value NPV

6.1. You must respect the sign ( + / - )

6.2. the NPV allow us to evaluate an investment decision

6.3. cash flow at regular intervals forever it is call PERPETUITY

6.3.1. Cf/r

6.4. + = GOOD

6.4.1. Accepting or rejecting a project

6.5. - = BAD

6.5.1. Choosing among project

6.6. NPV= Pv(Benefits)-Pv(cost)

7. Arbitrage and financial decision making

7.1. Valuing costs and benefits

7.1.1. Using market prices to determine cash values

7.1.2. When competetitive market prices are not available

8. Financial appeceament

8.1. lever

8.2. little effort generates more money

8.3. a credit is very good when you are going to balance

9. Equation

9.1. No arbitrage price of security

9.2. Price (Security) = PV(All cash flows paid by the security)

10. Instrument

10.1. Instrument vs Potential theoretician

10.1.1. Profit bubble

10.1.2. Bad news

10.1.3. POSITIVE Rumors

10.1.4. About market reaction

11. Return

11.1. Gain at the end of year/Initial cost

11.1.1. F-I/I

11.2. Expected return of a risk investment

11.2.1. Expected gain at the end of the year/Initial cost

11.3. Rs= Rf + ( Risk premium for investments)

11.3.1. Extra profit

11.3.1.1. Risk premium

11.4. Rp= Rs-Rf

11.5. Rb = Rf+(Risk Premium for the bond

12. T-Bills

12.1. Tresure

12.2. Cetes

13. Using the payback rule

13.1. Payback period the lengt of time required to recover the cost of an investment.

13.1.1. Payback Period = Cost of project / Annual Cash flows

13.2. IRR

13.2.1. Internal rate of return

13.2.1.1. try and failure

13.2.1.2. Evalute and compare projects

13.2.1.3. Iterations

14. Valuing Bonds and share

14.1. Bounds

14.1.1. Zero coupon

14.1.1.1. Cetes

14.1.2. Coupon Bonds

14.2. CPN = Coupon Rate X Face Value / Number of Coupon payments per year

14.3. |---c---c---c---c--c---|c+FV

14.4. Price = PV

14.4.1. Interest rate at which we discount bonds

14.5. Yield to Maturity

14.5.1. P = FV / (1 + YTMn)^n

14.6. Zero coupon

14.6.1. YTMn = (FV / P ) ^1/n - 1

14.7. Coupon Bond

14.7.1. P = CPN X 1/Y ( 1- 1 / (1 + Y)^N) + FV / (1+Y)^N

14.8. Yield to Maturity->Discount rate

14.9. Price of a coupon Bond

14.9.1. P = PV(Bond cash flows)

15. Investment grade

15.1. AAA & AA

15.1.1. High credit quality

15.2. A & BBB

15.2.1. Medium credit quaility

15.3. BB, B & CCC

15.3.1. Low credit quality (junk bonds)

15.4. Shares price

15.4.1. Div / Po

15.5. Po = Div1 + P1 / 1 +Re

15.6. Re = Div 1 + P1 / Po - 1

15.7. With different dividends

15.7.1. Po = Div1 / 1 + re + Div2 + p2 / (1 + Re)^2 + Divn / (1 + Re)^n

15.8. Dividend - Discount Model

15.8.1. Po = Div1 / Re - g

15.8.1.1. G

15.8.1.1.1. Growth rate

16. Capital Markets and CAPM (capital asset pricing model)

16.1. Small stocks the highest long-terms returns

16.1.1. largest fluctuations in price

16.2. Higher risk requires a higher return

16.3. T-Bills the lowest long-terms returns

16.3.1. lowest fluctuations in price

16.4. Expected return

16.4.1. E (R) = {r Pr X R

16.5. Varance

16.5.1. Var (R) = E [(R-E[R])^2]

16.6. Volality

16.6.1. Measure the total risk

16.6.1.1. SD ( R) = √ VAR(R)

16.7. Volatility measures total rick (systematic plus unsystematic)

16.8. Beta

16.8.1. measure the systematic risk

16.8.1.1. For every 1% change in the market, how much your security moves.

16.8.1.2. If the B is negative, you move to the inverse of the market

16.9. CAPM

16.9.1. Calculate the expected return for a risky security

16.9.2. Calculate the cost of particular project

17. Common Risk

17.1. Perfectly correlated

17.2. Affects all securities

18. Indepent Risk

18.1. Is uncorrelated

18.2. Affects a partiucular security

19. Diversification

19.1. The averaging out of indepent risks in a large portafolio

20. Market portofolio

20.1. An efficent consists of a weighted sum of each asset in the market

20.2. Market Risk premium

20.2.1. E [Rmkt] - Rf

20.3. CAPM

20.3.1. E(R)= rf + B x (E[Rmkt] - rf

20.3.1.1. Risk premium

21. EVA

21.1. Measure the value company generates from funds invested

21.1.1. Evan= Cn - r1n-1 - (Depreciation in Period n)

21.1.2. VA = Actual Value

21.1.3. Profitabily Index

21.1.3.1. Value created / Resource Consumed

21.1.3.1.1. NPV / Resource consumed

21.1.4. EVA for a year