Team A’s Summary of Week Two
The second week of Corporate Finance presented material covering valuation technique to establish the built-in value of debt and equity mechanisms, analyzing how markets provide a buffer for risks, and applying the capital-asset pricing representation to determine the required return of a business. With this week’s work, Team A saw topics that ranged in level of understanding.
The concepts from this week provided a more in-depth look at diversification of assets. The members of Team A found this information easy to understand as the participants use diversification to protect his or her investments with accounts such as 401K programs. The team also discussed the concept of when losses become realized. Some believe that the realization of a loss occurs when the value of an asset decreases whereas others believe the realization occurs at the sale of the asset. This discussion showed more insight into the time value of money.
The concept of Security Market Line and Capital Market Line, (SML) and (CML) respectively, provided an opportunity for some to do extra research and study to develop a better understanding of the terms and the calculations involved as this was new to a few members. However, extra research and the class discussions helped with the understanding of the CML and SML.
Another opportunity of extra learning came with calculating yield to maturity. This presented new areas of learning for some and it required extra time to learn the process of the calculation.
Week two provided valuable information for Team A. Many of the concepts provided a refresher for the team members just as other topics provided new ideas for each member to learn. As a team, the concepts and materials provided began to lay the foundation for each member’s personal and professional financial future. The team looks forward to... [continues]
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