Chapter 1
Introduction to the Theory and Practice of Project Finance
Introduction
This chapter introduces the theory and practice of project finance. It provides a general overview of everything that will be analyzed in greater detail in subsequent chapters. We believe it is useful to start with a chapter describing the salient features of a project finance deal, essential project finance terminology, and the basics of the four steps of risk management (identification, analysis, transfer, and residual management), together with the theory that financial economics has developed on this topic. This chapter also helps to understand the reasons for using project finance as compared with more traditional approaches employed by companies to finance ...
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