Alternative Approaches to Valuation and Investment

This module covers statistical measures of stand-alone risk using standard deviation of returns, explores three alternative attitudes towards risk with focus on risk aversion, and analyzes the impact of combining assets into portfolios. It includes quantifying diversification benefits and comparing performance against benchmarks.

This module differentiates between systematic and unsystematic risk, explains how asset prices reflect expected returns, covers the Capital Asset Pricing Model (CAPM), discusses empirical shortcomings, and explores advanced multi-factor models. It includes practical applications by finance managers of large listed firms.

This module explains the Weighted Average Cost of Capital (WACC) Formula, its practical estimation methods, implementation challenges, and potential perverse outcomes from haphazard application. It covers both debt and equity components of WACC.

This module covers how standard NPV analysis might lead to incorrect decisions when ignoring firm flexibility. It describes three common types of real options, explains decision tree analysis for valuing embedded real options, and discusses practical applications and empirical evidence.