Jason Laws has over 20 years of experience in teaching finance at undergraduate, postgraduate, MBA and professional level and is currently Senior Lecturer in Corporate Finance at the University of Liverpool. Jason joined the University of Liverpool Management School in July 2011 having previously worked at Liverpool John Moores University, University of London, University of Leicester, SOAS, Singapore Institute of Management and University of Glasgow.

• Introduction1 An Introduction to equity markets1.1 The benefits of a smooth-running stock exchange1.2 The efficient market hypothesis1.3 Ordinary shares1.4 Preference shares1.5 Authorised, issued and par values1.6 An initial public offering1.7 Stock market indices1.8 Stock market linkages1.9 Rights issues1.10 Stock splits1.11 Share repurpose2 Risk versus return2.1 A primer on the variance of an asset and covariance of a pair of assets2.2 The mean and variance of a portfolio2.3 Finding the risk of a three- or more asset portfolio2.4 Choosing the optimal portfolio2.5 The risk of large portfolios2.6 Market risk2.7 The capital asset pricing model2.8 The beta of a portfolio3 The time value of money, the dividend discount model and dividend policy3.1 The time value of money3.2 Present values3.3 Perpetuities and annuities3.4 Dividend discount model3.5 The Gordon growth model3.6 Two-period dividend growth model3.7 Example with earnings growth3.8 Real-life dividend policy4 The valuation of bonds4.1 Introduction to bonds4.2 Bond pricing4.3 The price yield curve4.4 The risk of default4.5 Does the yield to maturity change?4.6 Bond duration4.7 Characteristics of duration4.8 Relationship between bond prices and duration4.9 Bond convexity5 Investment appraisal5.1 Introduction to investment appraisal5.2 The net present value decision rule5.3 The relationship between NPV and discount rate5.4 The internal rate of return5.5 Pitfalls with using the internal rate of return5.6 The crossover rate5.7 Payback6 The weighted average cost of capital6.1 Determining the appropriate cost of capital6.2 The cost of debt capital6.3 The weighted average cost of capital6.4 Bringing this all together7 Foreign exchange risk7.1 Exchange-rate risk and exchange-rate regimes7.2 How big is the foreign exchange market7.3 Spot and forward markets and currency quotations8 An introduction to futures trading and hedging using futures8.1 Introduction to futures8.2 Futures positions8.3 Delivery8.4 Minimum performance bond requirements8.5 Hedging with futures contracts8.6 Basis8.7 Hedge efficiency8.8 Airlines hedging price risk9 Introduction to options9.1 Option terminology9.2 Option strategies9.3 Long call purchase9.4 Naked call write9.5 Long put purchase9.6 Naked put write9.7 Long and short straddle strategies9.8 The Black-Scholes option pricing model9.9 FX options as foreign currency insuranceSolution to activitiesBibliography

Jason Laws has over 20 years of experience in teaching finance at undergraduate, postgraduate, MBA and professional level and is currently Senior Lecturer in Corporate Finance at the University of Liverpool. Jason joined the University of Liverpool Management School in July 2011 having previously worked at Liverpool John Moores University, University of London, University of Leicester, SOAS, Singapore Institute of Management and University of Glasgow.

• Introduction1 An Introduction to equity markets1.1 The benefits of a smooth-running stock exchange1.2 The efficient market hypothesis1.3 Ordinary shares1.4 Preference shares1.5 Authorised, issued and par values1.6 An initial public offering1.7 Stock market indices1.8 Stock market linkages1.9 Rights issues1.10 Stock splits1.11 Share repurpose2 Risk versus return2.1 A primer on the variance of an asset and covariance of a pair of assets2.2 The mean and variance of a portfolio2.3 Finding the risk of a three- or more asset portfolio2.4 Choosing the optimal portfolio2.5 The risk of large portfolios2.6 Market risk2.7 The capital asset pricing model2.8 The beta of a portfolio3 The time value of money, the dividend discount model and dividend policy3.1 The time value of money3.2 Present values3.3 Perpetuities and annuities3.4 Dividend discount model3.5 The Gordon growth model3.6 Two-period dividend growth model3.7 Example with earnings growth3.8 Real-life dividend policy4 The valuation of bonds4.1 Introduction to bonds4.2 Bond pricing4.3 The price yield curve4.4 The risk of default4.5 Does the yield to maturity change?4.6 Bond duration4.7 Characteristics of duration4.8 Relationship between bond prices and duration4.9 Bond convexity5 Investment appraisal5.1 Introduction to investment appraisal5.2 The net present value decision rule5.3 The relationship between NPV and discount rate5.4 The internal rate of return5.5 Pitfalls with using the internal rate of return5.6 The crossover rate5.7 Payback6 The weighted average cost of capital6.1 Determining the appropriate cost of capital6.2 The cost of debt capital6.3 The weighted average cost of capital6.4 Bringing this all together7 Foreign exchange risk7.1 Exchange-rate risk and exchange-rate regimes7.2 How big is the foreign exchange market7.3 Spot and forward markets and currency quotations8 An introduction to futures trading and hedging using futures8.1 Introduction to futures8.2 Futures positions8.3 Delivery8.4 Minimum performance bond requirements8.5 Hedging with futures contracts8.6 Basis8.7 Hedge efficiency8.8 Airlines hedging price risk9 Introduction to options9.1 Option terminology9.2 Option strategies9.3 Long call purchase9.4 Naked call write9.5 Long put purchase9.6 Naked put write9.7 Long and short straddle strategies9.8 The Black-Scholes option pricing model9.9 FX options as foreign currency insuranceSolution to activitiesBibliography

Jason Laws has over 20 years of experience in teaching finance at undergraduate, postgraduate, MBA and professional level and is currently Senior Lecturer in Corporate Finance at the University of Liverpool. Jason joined the University of Liverpool Management School in July 2011 having previously worked at Liverpool John Moores University, University of London, University of Leicester, SOAS, Singapore Institute of Management and University of Glasgow.

• Introduction1 An Introduction to equity markets1.1 The benefits of a smooth-running stock exchange1.2 The efficient market hypothesis1.3 Ordinary shares1.4 Preference shares1.5 Authorised, issued and par values1.6 An initial public offering1.7 Stock market indices1.8 Stock market linkages1.9 Rights issues1.10 Stock splits1.11 Share repurpose2 Risk versus return2.1 A primer on the variance of an asset and covariance of a pair of assets2.2 The mean and variance of a portfolio2.3 Finding the risk of a three- or more asset portfolio2.4 Choosing the optimal portfolio2.5 The risk of large portfolios2.6 Market risk2.7 The capital asset pricing model2.8 The beta of a portfolio3 The time value of money, the dividend discount model and dividend policy3.1 The time value of money3.2 Present values3.3 Perpetuities and annuities3.4 Dividend discount model3.5 The Gordon growth model3.6 Two-period dividend growth model3.7 Example with earnings growth3.8 Real-life dividend policy4 The valuation of bonds4.1 Introduction to bonds4.2 Bond pricing4.3 The price yield curve4.4 The risk of default4.5 Does the yield to maturity change?4.6 Bond duration4.7 Characteristics of duration4.8 Relationship between bond prices and duration4.9 Bond convexity5 Investment appraisal5.1 Introduction to investment appraisal5.2 The net present value decision rule5.3 The relationship between NPV and discount rate5.4 The internal rate of return5.5 Pitfalls with using the internal rate of return5.6 The crossover rate5.7 Payback6 The weighted average cost of capital6.1 Determining the appropriate cost of capital6.2 The cost of debt capital6.3 The weighted average cost of capital6.4 Bringing this all together7 Foreign exchange risk7.1 Exchange-rate risk and exchange-rate regimes7.2 How big is the foreign exchange market7.3 Spot and forward markets and currency quotations8 An introduction to futures trading and hedging using futures8.1 Introduction to futures8.2 Futures positions8.3 Delivery8.4 Minimum performance bond requirements8.5 Hedging with futures contracts8.6 Basis8.7 Hedge efficiency8.8 Airlines hedging price risk9 Introduction to options9.1 Option terminology9.2 Option strategies9.3 Long call purchase9.4 Naked call write9.5 Long put purchase9.6 Naked put write9.7 Long and short straddle strategies9.8 The Black-Scholes option pricing model9.9 FX options as foreign currency insuranceSolution to activitiesBibliography