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Chapter from: "How Finance Works: The HBR Guide to Thinking Smart about the Numbers"
Published by: Harvard Business Publishing
Originally published in: 2020
Version: 23 April 2019

Abstract

If you're not a numbers person, then finance can be intimidating and easy to ignore. But if you want to advance in your career, you'll need to make smart financial decisions and develop the confidence to clearly communicate those decisions to others. In How Finance Works, Mihir Desai - a professor at Harvard Business School and author of The Wisdom of Finance - guides you into the complex but endlessly fascinating world of finance, demystifying it in the process. Chapter 4 examines value. The most critical questions in finance relate to the origins of value creation and how to measure it. We'll dig deeper into some of the tools developed in chapter 2 to answer many questions: Where does value come from? What does it meant to create value? What is a cost of capital? How do you measure risk?

About

Abstract

If you're not a numbers person, then finance can be intimidating and easy to ignore. But if you want to advance in your career, you'll need to make smart financial decisions and develop the confidence to clearly communicate those decisions to others. In How Finance Works, Mihir Desai - a professor at Harvard Business School and author of The Wisdom of Finance - guides you into the complex but endlessly fascinating world of finance, demystifying it in the process. Chapter 4 examines value. The most critical questions in finance relate to the origins of value creation and how to measure it. We'll dig deeper into some of the tools developed in chapter 2 to answer many questions: Where does value come from? What does it meant to create value? What is a cost of capital? How do you measure risk?

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