Decision Systems

Master the architecture of capital allocation decisions. From DCF valuation to real options, build systematic frameworks for investment, financing, and risk governance that scale across the enterprise.

40 Hours Content
8 Modules Curriculum
Chapters 1-14 Source
DSF Prep Certification
BOOK SOURCE MAPPING
Ch 1-3
Time Value & DCF
Ch 4-5
Risk & Return
Ch 6-7
Cost of Capital
Ch 8-10
Valuation Methods
Ch 11-14
Portfolio Theory

Course Modules

MODULE 1
Time Value Foundations
The mathematical bedrock of all capital decisions. Present value, future value, annuities, and perpetuities.
  • Discounting and compounding
  • NPV decision rules
  • IRR and its limitations
MODULE 2
DCF Architecture
Building robust discounted cash flow models. Free cash flow projection, terminal value, and sensitivity analysis.
  • FCF derivation
  • Terminal value methods
  • Scenario modeling
MODULE 3
Risk-Return Framework
Systematic treatment of risk in capital decisions. From variance to beta to factor models.
  • Risk measurement
  • CAPM and beta
  • Factor models
MODULE 4
Cost of Capital
The hurdle rate that governs all investment decisions. WACC estimation, component costs, and capital structure effects.
  • WACC derivation
  • Cost of equity estimation
  • Debt cost and tax shields
MODULE 5
Relative Valuation
Market-based valuation using multiples. Selection, adjustment, and application of comparable companies and transactions.
  • Multiple selection
  • Comparable adjustment
  • Trading vs transaction multiples
MODULE 6
Fixed Income Analytics
Bond valuation and interest rate risk. Duration, convexity, and yield curve analysis for portfolio applications.
  • Bond pricing
  • Duration and convexity
  • Yield curve strategies
MODULE 7
Portfolio Optimization
Mean-variance optimization and the efficient frontier. From Markowitz to modern constrained optimization.
  • Efficient frontier
  • Constraint handling
  • Rebalancing
MODULE 8
Decision Governance
Institutionalizing capital allocation processes. Investment committee structure, approval workflows, and escalation protocols.
  • Process design
  • Committee structure
  • Documentation standards

Learning Outcomes

Build DCF Models: Construct robust discounted cash flow valuation models with proper terminal value treatment and sensitivity analysis.
Estimate Cost of Capital: Calculate WACC with proper treatment of taxes, target capital structure, and risk adjustments.
Apply Portfolio Theory: Construct efficient portfolios using mean-variance optimization with real-world constraints.
Design Decision Processes: Structure investment committee workflows and approval protocols for institutional capital allocation.

Master Capital Allocation

Decision Systems prepares you for the DSF certification and provides the quantitative foundation for all advanced courses.

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