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Corporate Finance (Subject) / Introduction / Principles of Corporate Finance (Lesson)

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• Net Present Value NPV Barwert e.g. -5000+(5500/1,05)=238,10 NPV>0   --> Durchführen
• Internal Rate of Return IRR interner Zinsfuß e.g. (5500/5000)-1=10%
• Expected Return e.g. (1/3) x -0,4 + (1/3) x 0,2 + (1/3) x 0,8 = 0,2
• Behavioral Finance describe and explain individual decision making behavior and resulting anomalies on capital markets
• disposition effect a distinct tendency of investors to: -continue holding stocks that currently trade at a loss and -sell stocks that currently trade at a gain
• Debt vs Equity Debt: Fixed claim, certain repayment   Equity: Residual claim on a share of the company's assets, virtually risky by definition---> higher return for a higher risk
• Name the three axioms of expected utility theory -complete ordering   -continuity   -independence
• what does risk averse mean? it means that people are willing to give up earnings, in order to decrease their risk.
• Grundsätze der Portfolio-Theorie 1.)Die Investoren möchten eine möglichst hohe Rendite erzielen. Die Angemessenheit der Höhe der Rendite unterscheidet sich von Investor zu Investor -> bei gegebenen erwarteten Erträgen, wählt der Investor also das Portfolio mit dem geringerem Risiko 2.)Die Rendite soll zuverlässig, stabil und nicht mit Unsicherheiten behaftet sein.

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