Finance U — Issue #4

Welcome to the 4th Issue of Finance U — July 11th, 2025

📈 Wall Street & Beyond

JPMorgan Warns of Under-Priced Risks in Interest Rates

JPMorgan Chase CEO Jamie Dimon recently warned that markets may be overly optimistic about rate cuts. He believes investors are underestimating the possibility that interest rates could stay elevated longer than expected, a scenario that could trigger fresh volatility across both stock and bond markets. With inflation still sticky and the Fed holding firm, Dimon’s message is clear: don’t assume the cost of borrowing is coming down anytime soon.

Why it matters: Interest rates influence everything from borrowing costs to stock valuations and portfolio strategy. An unexpected rise or sustained high rates can impact corporate earnings and investor portfolios, making Dimon’s warning especially relevant for market watchers.

Student Takeaway: Whether you’re investing, working in finance, or just trying to understand the economy, knowing how interest rates affect markets is essential. Dimon’s warning highlights the importance of risk management and staying informed on macroeconomic trends.

🧠 Finance 101: Intro to Discounted Cash Flow (DCF)

What to know

A Discounted Cash Flow (DCF) is a financial model used to estimate the current value of an investment or company based on the cash it is expected to generate in the future. The key idea behind a DCF is that a dollar today is worth more than a dollar in the future due to factors like inflation, risk, and opportunity cost.

By projecting future cash flows and then “discounting” them back to today’s dollars using a specific rate, a DCF helps investors understand the intrinsic value of a business or asset. This goes beyond just looking at current stock prices or earnings — it reveals what something is truly worth based on expected performance.

Why it matters: DCF analysis is one of the most common tools used by investors, analysts, and companies to make smart decisions about buying or selling businesses. It helps identify whether a stock is undervalued or overvalued by comparing market prices to the underlying cash flow value. Learning how to use DCF models builds a strong foundation for advanced finance topics like mergers and acquisitions, private equity, and corporate strategy.

Student Takeaway: Understanding DCFs equips you to evaluate companies and investments critically, a skill highly valued in internships, finance courses, and careers. It’s a powerful tool to think beyond headlines and stock prices and dig into what really drives value.

🔦 Term Spotlight: Discount Rate & Present Value

Discount Rate: The discount rate is the interest rate used to convert future cash flows into today’s dollars. It reflects the risk and opportunity cost of investing your money elsewhere. In simple terms, it answers the question: How much is a dollar in the future worth right now?

Present Value: Present value is the current worth of a future amount of money, given a specific discount rate. It tells you how much those future cash flows are worth today. The higher the discount rate, the lower the present value, because future money is worth less when there’s more risk or better alternatives.

Why it matters: Discount rates and present value are the building blocks of financial decision-making. They explain why investors demand compensation for risk and why timing matters when it comes to money. Without these concepts, it’s impossible to accurately value investments, projects, or companies, making them essential for anyone looking to understand finance deeply.

Student Takeaway: Mastering discount rates and present value gives you a powerful lens to see how money’s value changes over time. This understanding is crucial not just for DCFs, but for everything from investing to budgeting and beyond, making you a smarter decision-maker in finance and everyday life.

💼 Guest Column: Insights from the Inside

By Jamie McGurk, General Partner at BAM Elevate

Hello, I’m Jamie and I’m honored that Wrigley asked me to contribute to Finance U. I am a 25-year finance professional with undergraduate and graduate degrees in finance. My career has focused on technology companies and has spanned debt capital markets, investment banking, venture capital, and growth investing at firms like Morgan Stanley and Andreessen Horowitz. I am currently an investor in pre-IPO stage companies at BAM Elevate, the private investment group at Balyasny Asset Management, a multi-strategy hedge fund.

Reading Finance U has become a regular part of my routine, and I only wish I had a resource like this when I was an undergrad. I can assure you that the topics covered here are absolutely foundational for a successful career in finance. Throughout my career, I have analyzed thousands of financial statements, and understanding each of the three statements covered in the initial Finance U newsletters—and how they work together—is critical.

Twenty-five years in, the first thing I do when I want to understand a company is pull up their most recent 10-K (the required annual financial filing), and I immediately flip to the “F pages,” where the financial statements are. Before even knowing the specifics of the business, I want to read through the Income Statement—this tells me the scale, growth, margins, and profitability of the business; the Balance Sheet—how they run the business and allocate capital; and the Cash Flow Statement—what is the health of the business and how profitable it is.

In my work, I focus exclusively on technology companies, so I know what to expect for gross margin and profitability of a software company vs. a hardware company vs. a services company, what their “go-to-market” strategy is, and how they allocate capital. The qualitative and strategic aspects of a business work together with the financial aspects. If you understand the financial statements of a business, you are more than halfway to understanding how it works.

Many of you will be interviewing for internships and full-time finance positions soon. When I interview candidates coming directly from undergrad, one of the first things I ask about is their understanding of financial statements. I ask basic questions like gross margin, operating margin, EBITDA, assets vs. liabilities, etc. I cover all three statements and usually end with one of my favorite trick interview questions:
“If you could only have two of the three financial statements, which two would you choose, and why?”

Now, the impetuous analyst in me wants to blurt out “CASH FLOW STATEMENT!!”, because let’s be real: the cash flow statement is critical. However, the correct answer is the Income Statement and the Balance Sheet, because if given these two, one can build the cash flow statement. Understanding this shows you not only know how to analyze a business and finance principles, but also understand how financial statements work together.

Once you master financial statements, I think you’ll find this work extremely interesting…and fun!

— Jamie McGurk, General Partner at BAM Elevate

🧰 Toolbox: Resources to Reinforce Learning

🍿Watch: This video helps break down DCFs, taught by a former investment banker. While it is a little advanced for now, we will get into how to calculate a DCF in the next issue.

🚀 Practice: Forage is a free online platform where you can practice real finance and business skills through virtual job simulations. It’s a great way to apply what you’re learning in Finance U, build your resume, and get a sneak peek at what working at top firms is really like. You will be able to work on real projects and in many cases, build a DCF from scratch.

🔁 The Rundown

In this issue of Finance U, we introduced Discounted Cash Flow (DCF), explaining what it is and why it matters for valuing companies. We spotlighted two key terms: discount rate and present value, which form the foundation of DCF analysis. Our guest column featured Jamie McGurk, a seasoned investor at BAM Elevate, who shared insights on mastering financial statements for a successful finance career. Plus, we provided a video to help you dive deeper into DCFs and highlighted Forage, where you can practice through virtual job simulations.

✝️ Verse of The Week

Galatians 6:9 “Let us not grow weary in doing good, for at the proper time we will reap a harvest if we do not give up.”

Student Takeaway: In the middle of long nights, hard classes, and job applications that go unanswered, it’s easy to wonder if your effort is really making a difference. This verse reminds us that persistence matters. Whether you're learning new finance concepts, applying for that dream internship, or just trying to grow into who you're called to be, keep showing up. God sees your work even when it feels unnoticed. The harvest may not come right away, but it will come in due time. Don’t give up — your consistency, when rooted in faith, is never wasted.

Thanks for reading the 4th issue of Finance U!

Feel free to reply with feedback, share with a friend, or let me know what you would like to see in future issues.

-Wrigley Stevens