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Risk & Return

In this course, you will learn to estimate the expected return of equity and debt. You will also learn to estimate the weighted average cost of capital (WACC), the opportunity cost of capital you should use when discounting the free cash flows to value a firm.

In the process, you will learn to estimate the risk of financial assets and how use this measure of risk to calculate expected returns. You will also learn how the capital structure of a firm affects the riskiness of its equity and debt. Throughout the course, you will learn how to construct Excel models to value firms using hands on activities.

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What's inside

Learning objectives

How to measure risk
Estimate the expected return of an asset based on its risk

Adjust the risk of the equity and debt of a firm when the firm changes its capital structure
Calculate the weighted average cost of capital (essential input to value of firm)

How to measure risk
Estimate the expected return of an asset based on its risk
Adjust the risk of the equity and debt of a firm when the firm changes its capital structure
Calculate the weighted average cost of capital (essential input to value of firm)

Syllabus

Week 1: Risk, return, and the Capital Asset Pricing Model (CAPM)

Week 2: The Weighted Average Cost of Capital (WACC) and the effect of capital structure on WACC

Week 3: Case study: Estimating the WACC

Week 4: Valuation capstone case

Good to know

Know what's good

, what to watch for

, and possible dealbreakers

Taught by Daniel Wolfenzon, who is recognized for their work in finance

Covers the core concepts of risk, return, and capital cost

Provides practical experience through hands-on Excel modeling activities

May be challenging for learners without a background in finance or economics

Emphasizes quantitative methods, which may be less appealing to learners who prefer qualitative approaches

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Reviews summary

Introductory risk and return overview

According to students, this course offers introductory-level knowledge of risk and return. Learners say the course content is practical for those working with small businesses and entrepreneurs in microfinance.

Useful for those working with small businesses and entrepreneurs in microfinance.

"I am working in a micro finance organisation. Risk and return both are very familiar term to me."

"In micro finance we are mostly working with small business holder and entrepreneurs"

Suitable for beginners in risk and return.

"this course offers introductory-level knowledge of risk and return"

"The course I think will make it easy and give me depath understanding both risk and return."

Activities

Be better prepared before your course. Deepen your understanding during and after it. Supplement your coursework and achieve mastery of the topics covered in Risk & Return with these activities:

Review Risk and Its Implications

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Refresh your understanding of the concept of risk, probability, and their implications in the context of financial decision-making.

Browse courses on Risk

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Read relevant literature
Solve practice questions
Attend a refresher workshop

Volunteer at a Financial Non-Profit

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Gain practical experience in financial analysis and decision-making by volunteering at a non-profit organization focused on financial matters.

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Find a suitable non-profit organization
Inquire about volunteer opportunities
Assist with financial analysis or other related tasks

Practice Estimating Risk and Return

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Enhance your ability to estimate risk and return, which is crucial for sound financial decision-making.

Browse courses on Risk

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Solve problems involving risk and return calculation
Use online tools or Excel to practice
Discuss with peers or a tutor

Five other activities

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Show all eight activities

Explore Capital Asset Pricing Model (CAPM)

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Gain a deeper understanding of the Capital Asset Pricing Model (CAPM), a widely used tool for estimating expected return and risk.

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Watch online tutorials
Read articles or books on CAPM
Apply CAPM to real-world examples

Form a Study Group on Financial Management

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Collaborate with peers to enhance your understanding of financial management concepts through regular discussions and knowledge sharing.

Browse courses on Weighted Average Cost of Capital (WACC)

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Recruit interested peers
Set up regular meeting times
Review course materials and discuss concepts

Create a WACC Calculation Model

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Develop a practical understanding of WACC calculation by creating your own model, which can be a valuable tool in financial analysis.

Browse courses on Weighted Average Cost of Capital (WACC)

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Research and gather data
Build the model in Excel or a similar tool
Test and refine the model

Attend a Workshop on Advanced Financial Modeling

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Gain exposure to advanced financial modeling techniques and best practices through a structured workshop led by experienced professionals.

Browse courses on Weighted Average Cost of Capital (WACC)

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Research and find a relevant workshop
Register and attend the workshop
Apply the techniques learned to your own projects

Participate in a Financial Modeling Competition

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Challenge yourself in a financial modeling competition to apply your knowledge and skills in a practical and engaging way.

Browse courses on Weighted Average Cost of Capital (WACC)

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Find a suitable competition
Assemble a team or participate individually
Work on the case study
Submit your model and presentation

Career center

Learners who complete Risk & Return will develop knowledge and skills that may be useful to these careers:

Portfolio Manager

Portfolio Managers oversee the investment portfolios of individuals and institutions. Their primary responsibilities include performing financial analysis, managing risk, and making investment decisions. The Risk and Return course provides a solid foundation for these tasks by teaching students how to assess risk and calculate expected returns. The course also covers the weighted average cost of capital (WACC), a key input for valuing firms.

See salaries and explore the career path for Portfolio Manager

Investment Banker

Investment Bankers provide financial advice to corporations and governments. They help companies raise capital through stock and bond offerings, and they advise on mergers and acquisitions. The Risk and Return course provides a strong foundation for these tasks by teaching students how to assess risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Investment Banker

Financial Analyst

Financial Analysts provide investment advice to individuals and institutions. They conduct financial research, analyze investment opportunities, and make recommendations to clients. The Risk and Return course provides a strong foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Financial Analyst

Risk Manager

Risk Managers identify, assess, and manage financial risks for organizations. They develop and implement risk management strategies to minimize losses and protect the organization's financial health. The Risk and Return course provides a strong foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Risk Manager

Quantitative Analyst

Quantitative Analysts use mathematical and statistical models to analyze financial data. They develop trading strategies, forecast market trends, and manage risk. The Risk and Return course provides a strong foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Quantitative Analyst

Actuary

Actuaries use mathematical and statistical models to assess risk and uncertainty in the insurance industry. They develop insurance products, set premiums, and manage risk. The Risk and Return course provides a strong foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Actuary

Insurance Underwriter

Insurance Underwriters assess risk and determine the premiums for insurance policies. They evaluate the likelihood and severity of potential losses, and they set premiums accordingly. The Risk and Return course provides a solid foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Insurance Underwriter

Credit Analyst

Credit Analysts assess the creditworthiness of borrowers and make recommendations on lending decisions. They evaluate the borrower's financial history, income, and assets to determine their ability to repay a loan. The Risk and Return course provides a strong foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Credit Analyst

Venture Capitalist

Venture Capitalists invest in early-stage companies with high growth potential. They evaluate investment opportunities, assess risk, and provide funding to help these companies grow. The Risk and Return course provides a solid foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Venture Capitalist

Private Equity Analyst

Private Equity Analysts evaluate investment opportunities in private companies. They conduct financial analysis, assess risk, and make investment recommendations. The Risk and Return course provides a solid foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Private Equity Analyst

Corporate Finance Analyst

Corporate Finance Analysts evaluate investment opportunities and make recommendations on capital budgeting decisions. They analyze the financial impact of investment projects and make recommendations on whether to proceed with the project. The Risk and Return course provides a strong foundation for these tasks by teaching students how to measure risk, estimate expected returns, and value firms based on the weighted average cost of capital (WACC).

See salaries and explore the career path for Corporate Finance Analyst

Financial Planner

Financial Planners help individuals and families plan for their financial future. They assess their client's financial needs, goals, and risk tolerance, and develop financial plans to help them achieve their goals. The Risk and Return course may provide some insights into risk and expected returns, which can be helpful for financial planning.

See salaries and explore the career path for Financial Planner

Financial Advisor

Financial Advisors provide financial advice to individuals and families. They offer a wide range of services, including investment advice, retirement planning, and estate planning. The Risk and Return course may provide some insights into risk and expected returns, which can be helpful for financial planning.

See salaries and explore the career path for Financial Advisor

Insurance Agent

Insurance Agents sell insurance policies to individuals and businesses. They assess the client's needs and recommend appropriate policies. The Risk and Return course may provide some insights into risk and expected returns, which can be helpful for understanding insurance products.

See salaries and explore the career path for Insurance Agent

Real Estate Agent

Real Estate Agents help individuals and businesses buy and sell real estate. They assess the client's needs and recommend appropriate properties. The Risk and Return course may provide some insights into risk and expected returns, which can be helpful for understanding real estate investments.

See salaries and explore the career path for Real Estate Agent

Reading list

We've selected 15 books that we think will supplement your learning. Use these to develop background knowledge, enrich your coursework, and gain a deeper understanding of the topics covered in Risk & Return.

Principles of Corporate Finance

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Provides a comprehensive overview of investment analysis and portfolio management. It covers a wide range of topics, including risk and return, asset pricing, portfolio theory, and fixed income securities.

Risk & Return

What's inside

Learning objectives

Syllabus

Good to know

Save this course

Reviews summary

Introductory risk and return overview

Activities

Career center

Reading list

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