Introduction & Capital Markets

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1 February 1st, 2016 Introduction & Capital Markets Jade Beguelin (CTO) New Analyst Training Program Week One

2 Agenda 1. New Analyst Training Program Introduction 2. New Analyst Training Program Expectations 3. Introduction to Capital Markets

3 New Analyst Training Introduction The purpose of this program is to provide the fundamental information needed to perform financial analysis. 9 Weeks Long 8 educational presentations 1 stock pitch and quiz class Designed to provide common baseline of knowledge among incoming prospective analysts Accounting Finance Value Investing Economics

4 Program Curriculum The following is what will be covered each week. Week 1: Introduction, program expectations, and the basics of capital markets Week 2: Investing, macroeconomics, and pitching Week 3: Accounting I Week 4: Accounting II Week 5: Comparable Companies Analysis Week 6: Time Value of Money and Bonds Week 7: DCF Introduction and Theory Week 8: DCF Construction and Evaluation Week 9: Stock pitch presentation (April 9 th, 10 th ) and final exam (April 11 th ) Mondays without training: March 7 th (Spring Break), March 28 th (Easter Break)

5 Graduation Requirements All prospective analysts must complete the following requirements. 1 Unexcused Absence Sign in on sign in sheet at every training session! Must make up any missed work. All meeting slides will be up on: jlb320@georgetown.edu if you have an absence that you think should be excused Satisfactory presentation of the stock pitch and score on final exam.

6 Post Graduation Once the program is completed, analysts will be placed into their sectors based on preferences and performance. Analysts will be ranked in three categories: Outstanding (Top 33% of graduates) Superior (Middle 33%) Satisfactory (Bottom 33%) Analysts will rank their top three sector preferences The Executive Board will assign analysts to sectors to ensure equal spread. You will now be a full-time analyst with GCI!

7 How to Succeed What you put into the training program will be what you get out. Be engaged. Ask questions. Training sessions should be open to discussion. Feel free to chat after the sessions. Go to Market Updates! Cannot stress enough how helpful these can be Do recommended reading. This week: Or just Google Oaktree Capital -> Memos from Howard Marks -> > On the Couch

8 Capital Markets

9 What is Finance? Finance deals with the process of obtaining funds. Process of obtaining funds Personal Finance Corporate Finance Public Finance All involve actions such as obtaining credit, managing funds, and covering liabilities.

10 Financial Markets Flow Chart Lenders (Investors) Capital Returns Financial Markets (Banks) Capital Securities Borrowers (Govt s & Companies) Other Markets e.g. FX, Commodities, etc. Money Markets Capital Markets Equity (Stocks) Debt (Bonds)

11 Financial Markets Markets that bring together buyers and sellers of financial assets and valuable goods. Broken down into various markets: Capital Markets Used for raising of long term finance Money Markets Used for raising of short term finance (<90 days)

12 Types of Capital Markets The types of capital markets are primary markets and secondary markets. Primary Markets New securities sold from issuers to buyers (think IPO) Secondary Markets Bought and sold among buyers

13 Stocks Represent ownership stake in a company Broken down into Common and Preferred Stock Preferred Have a greater claim to a company s assets The first to receive dividends, usually include a fixed dividend as a fraction of par value. Hybrid security between a stock and a bond. Traded on stock exchanges (NYSE, NASDAQ)

14 Bonds Loans for a defined period of time that pay a fixed or variable interest rate. Fixed payments are known as coupon payments. Coupon Rate = Annual Coupon Payments / Face Value of Bond

15 Stocks vs. Bonds Stocks Ownership claim Weak claim on company assets Generally higher returns Bonds Lender claim Strong claim on company assets Generally lower returns

16 Georgetown Collegiate Investors

Chapter 11: Financial Markets Section 2

Chapter 11: Financial Markets Section 2 Objectives 1. Describe the characteristics of bonds as financial assets. 2. Identify different types of bonds. 3. Describe the characteristics of other types of