In Debt, we take on one of the most challenging financial questions that remains unresolved: How much to borrow? We start by demonstrating why using debt has always been and continues to be a great temptation, particularly when borrowing costs are historically low. We identify conditions for selecting the optimal amount of debt for a corporation looking to maximize its value. You’ll become fluent in related concepts like norms and benchmarks. You will explore these and other factors that influence debt for individuals and for public sector organizations -including governments, who are the largest consumers of debt. Like pollution, debt creates systemic risks even for the people and organizations that don’t create it. This course discusses the imperative of limiting and reducing debt and the costs to all of us if we don’t. We build on case based learning giving you opportunities to interpret, uncover and acquire financial information that is often hidden or missing. We also summarize important threads from previous courses to give you a deep and cohesive understanding of when debt works for you and when it becomes your worst enemy.
Overview
Syllabus
- Welcome & Personal Debt
- Welcome! This first week will introduce you to a critical question for our time: how much debt is too much debt? We start by demonstrating why using debt has always been and continues to be a great temptation, particularly when borrowing costs are historically low. Then we’ll delve into Personal Debt and how building your financial literacy as well as tapping into your own motivations can help you manage your debt level, instead of it managing you. You will make connections between Debt and concepts in the prior three courses of this Specialization, and start examining what area of debt from your experiences that you would like to address as part of this course’s final assignment.
- Corporate Debt
- This week we will look at Corporate Debt and how this type of debt has significant advantages over equity under certain conditions. Taking a critical yet realistic lense, we’ll explore how debt favours and benefit firms who use it as financial leverage aimed at increasing a firm’s value, while impressing an understanding of why this is an advantage only during times of growth. We’ll also tap into each other’s thoughts on how this type of debt could influence our own investing decisions
- Government Debt
- This week we’ll move beyond the personal and corporate to the bigger picture of Government Debt. We’ll collectively understand why a measure of debt is often a requirement to grow national wealth. But, we’ll also discuss how this ‘measure’ of debt has become a ‘monolith’ of debt in many instances around the globe. The key aspect that we’ll work together to uncover is how this impacts you and the people and places surrounding you, and consider how we might plan and react to finding ourselves at an economic turning point in our history. This week will also be the launch of our peer review activity around your debt case study.
- Debt Synthesis
- Week 4 is the time to synthesize all that we have learned about debt - from our personal experiences, the state of corporations as well as the current level of government debt, and scrutinize and address it in a way that will increase your debt literacy. You will also reexamine your debt case study and share your biggest takeaways from the course, and look ahead to F4E: Capstone!
Taught by
Arshad Ahmad
