 Let me ask you a few questions before we start. How many of you, can you raise your hand, know in advance about Cambridge term system before going here? Anybody? Okay. So let me be clear about that. We have three terms here in Cambridge. Micro-master, length term, and eastern term. I arrived here four years ago. I'm still learning about the system. It's so complicated. But the bottom line is that the term is so short here. I was short. I only knew about the term system in the US. And it lasts for 13 weeks each. Okay? And you have one week more just for post-revision and other things. So 14 weeks. And here, in the best cases, you have eight. If not, nine weeks. That means what? On the one side, it's very nice because then you have a very concentrated period of learning. Then you have awful lot of free time to read about things that you are interested in or take part in the social activities in Cambridge, which is one of the most fantastic experience ever that I know about. That is on the positive side. The negative side is that everything will be very quick and condensed. And it's a horrible thing for you and for us. Because, you know, we have to do a job in something like two-thirds of time or even half of the amount of time in comparison to colleagues and students in the US. Okay? So going back to the previous speaker told you time management is a huge issue. You need to be extremely focused and extremely efficient during the term time. Otherwise, you will have no opportunity to combine. The term is passing and after micro-master, you have a few weeks and you're going to have exams. And then after the exam, you're going to have, you know, land term arriving. And then land term is even shorter than micro-master. Okay? So time management before I mention other things. So the second point that I would like to insist on is that normally for this course, M-Sray, I will be given 32 hours to 36 hours to do so. To make sure that we go smoothly at the beginning and we go faster by the end of the course and we cover all the main topics in finance. Now, we will have to get at 16 hours. Right? So you and me will have to make a choice. We cannot cover everything and there is no need to do so. But then for each of the things that we covered in the class, we want to make sure that we do the main things, the most important things that cannot be ignored. Okay? So let me just tell you the second question that I would like to have. How many of you, can you raise your hand, have any experience dealing with anything finance, either at the corporate level or M-Sray? Okay, three of you. What did you do exactly? I was just in the financial department and the workforce was connected to some debt and so on. Okay, debt related issues. And you? I've done some basic finance related courses at Columbia. Okay, so what exactly, for example, what did you do? Basic finance and accounting policies. Okay. And some other investment banking financing. How many hours did you do yourself? 36 hours. Okay, great. And there's another question. You, right? Yes. I thought it was close to a deal which was connected with finance. It was a deal between another company and making this team. It required financial knowledge and IRR and something like that to collaborate with the company. Okay. So now I have a sense of who you are. So that is another challenge. Some of you have some interaction with finance things and some of you completely never did so. So the challenge of this course is going to give you irrespectively what you did before a big picture of what you might have to experience in your professional life. I think either you work for a consulting firm, an investment bank, or in a law practice firm. And I think that you're going to have some days to deal with some of the so-called finance issues. So this is exactly this course. So we will review together. Okay. So a few fundamental principles in finance. We cannot do all, obviously, okay, should not pretend to do all. But we're going to do it in a good way in the sense that I mean basically talk of the fundamental, the thing that you cannot ignore. And if you remember a few things, then from that point you can really deal with confidence with a few models that you have in the future. So we're going to start by having a look at major financial statement and document. So basically, when you deal with something, you want to be able to read a few financial documents, right? The life of balance sheet and income statement. And then understand, you know, not everything because you are not supposed to be an accountant, right? At least you understand the main lines and the bottom lines of those documents and get a few major information, major point, major things on those documents. And then for the second and third topic, basically we try to calculate the most important thing in finance, which is cash flow. Okay. Understand how a firm generates cash flow, how a firm is good or bad based on the cash flow that the firm generates. And then based on the cash flow, we're going to have one of the most direct applications that I'm sure that it will be experienced in our life, which is how to value financial asset, the like of stock and bonds, based on the cash flow generated by an asset on the firm, right? And then if time is slow, we're going to go deep into a few kind of budgeting decisions. So if we are put ourselves, you know, in terms of investors or the firm or the CEO, then you need to make decisions to invest. So capital budgeting decisions. And you have to make sense of this decision, the problem that you have, that is capital budgeting decisions. All major corporations have to look at capital budgeting decisions every day. Because the simple reason is that if you don't invest today, you're going to have no revenues and no return on investment in the future. So investment is one of the most important decisions in finance and in corporate life if you are one of the top guys in the corporations. Okay. And then the last but not less important is to look at a few other important notions in finance, which is return and the cost of capital. Basically if you grab a few major things from those topics, I will not assure that you're going to be an excellent financialer, but at least you understand what other people might be talking of. Like if you talk to an investment banker, all the time they're going to talk of cash flow, they're going to talk of valuation, they're going to discuss return and the cost of capital. And those fundamental things are ongoing every day for guys in corporations and in finance. Now, 16 hours and a lot of things to do. The most important thing about all this, there is an objective of this course is to give you a few simple tools, technical tools and also technical argument that help you in the future to stand out to, you know, argument from other colleagues or investors or other partners who will be involved in corporate transactions. So for example, after this course, people cannot tell you anything about cash flow of firm. If you can do so, I will be very happy. That means that you grab the things and you understand what is going on and that it will not let people to tell you whatever they want to tell you. So the course aims to be practical. We're going to do a lot of simple examples. I will give you a set of homework that we're going to do together in class after, but then I will provide you with a few problems with solutions. So we have to spend time on that, do our best. If you cannot, you surrender, then you refer to the solution that is given with each of the voluntary kind of problem sets. So assessment very quickly. There will be only one and a single exam that a cut for 100% of the final mark. The exam will be designed in a way that allow you to really grab the material. So I will not ask you sophisticated exercises that are based on calculations. I will give you the like of easy problem in terms of calculation. But then I will ask you to put in some arguments based on a few principles that we did in class. First of all, I will give you so, you know, like stochastic calculus you cannot do in this class. But then I will ask you more for argument, why you are for that, why you are against. So there is a hard core part, which is you have to calculate it. You have to get used how to calculate it. Or at least understand how calculation are done. But then you have to put argument into the problem. So most questions are easy, but about a quarter is a bit more challenging than you have to argue. You just not take the thing that you can calculate as given. So for example, if I ask you to value the equity of a firm, you cannot tell me that. And you find a negative number, figure. Immediately you say that either it was wrong or something because, you know, they can never be negative equity value. Or if it is true that it is negative, then you have to find out the reason why the equity of a firm is negative. And you have to set it to be zero because, you know, if you are shareholder of IBM, the worst that can happen to you is that you lose everything. You cannot, like, have to sell your house. It is limited liability principle. So something like this. Now, there is a textbook for that. I think that the textbook is available here. And, you know, guys in finance, all of them in finance are very good at making money. So you have thousands of textbooks in finance. And each textbook, we have a new edition every year and a half or so. And it's cost, okay, a book like this is going to cost you about $150, $100 something like this. So I would recommend you to read if you have time in advance of each of the topics that we will be doing in the class because we already have 16 hours. And despite of me, I cannot explain all the corner of the things. I will be focused on many things. But I will be open to everything, all the questions that we might have, okay, either when we talk, discuss in class or after, okay. If you cannot have this kind of time, then I recommend you to start from the slide. Do all the dirty job in doing homework, exercise, voluntary exercises with solutions. And talk to me if you have any problem. But this is a main textbook based on which I will try to simplify things and explain to you, you know, a few fundamental principles in finance, okay. So about myself, nothing special. I joined church business school four years ago and still learning about Cambridge. And I do research in corporate finance and political finance. And I do publish in a few major journal in finance. And so I also take part, like you, I guess, in some of the major associations of researchers in finance. So I think that we had something like two minutes for questions. So let's have two or three minutes for questions if you have any.