Corporate Finance Fundamentals , Ross, Westerfield and Jordan ...


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Corporate Finance Fundamentals , Ross, Westerfield and Jordan ...

  1. 1. Hanyang University International Summer School Program COURSE SYLLABUS PRINCIPLES OF FINANCIAL MANAGEMENT (3 cr.) Summer 2010 Instructor: Rim El Khoury Email: Course Objectives: This course is an introductory level financial management course. The purpose is to introduce students to the role of the financial manager and to the techniques for obtaining and using funds to maximize the value of the firm. This course will provide a comprehensive overview of the fundamental principles and theoretical framework for sound corporate financial management decisions. Topics will include the analysis of financial statements, cash flow analysis to finance investment, valuation methods, risk and rate of return in making financial decisions, and investment analysis. The main objectives of the course are: 1. To develop an in depth understanding of important finance principles. 2. To acquire some ability in applying these principles in making financial management decisions. 3. To evaluate a firm's performance and develop financial plans for it. Teaching Methodology and Techniques: The course involves a combination of conceptual lectures, discussions with active participations, and solving problems. The lectures will focus on the description and understanding of the theoretical concepts. The practical implications will be analyzed through discussions and examples. The structure of this class makes study and preparation outside of class extremely important. As a rule, I will lecture on a chapter expecting that the student has read the material ahead of lecture time. Therefore, reading the assigned chapters and having some familiarity with them before class will greatly assist your understanding of the lecture. We will also work some of the end-of chapters’ problems when lecturing on a particular chapter is finished. Required Textbook: Fundamentals of Financial Management, Brigham and Houston, 12th Edition Optional Reference: Corporate Finance Fundamentals, Ross, Westerfield and Jordan, 8th Edition Additional Readings: Page 1 of 5
  2. 2. Students are encouraged to read popular financial press articles during the term. Recommended Sources include: - The Economist: The best all around source of information - Financial Times (FT): The best international business newspaper - Wall Street Journal (WSJ): The old standard - Business Week: Good general business magazine (American, European, or Arabic edition) Grading and Evaluation: Your final grades for the course will be based on your performance on two exams, attendance, class participation, homework and assignments as follows: Tasks Assessment Personal valuation Attendance and Participation 10% Homework/ Assignments 15% Exams Midterm Examination 35% Final Examination 40% Course Structure and policies: 1. Attendance: Daily attendance is EXTREMELY important! It’s imperative that students attend each and every class. Good attendance is your easiest path to a good grade. Attendance will be taken at the beginning of each class. Late comers will not be marked absent but two “lates” equal one absence. In case of absence, students should contact me ahead of class meeting. You should be aware that your grade will likely suffer as a result of missing classes. Absence does not absolve a student from the responsibility for the work done or for any announcement made during his/her absence. Attendance will be assigned 5 points of the participation grade. Student will lose points for every class he or she misses. Students should attend and leave the class on time. If the instructor doesn’t show up in the first 15 minutes, they can leave the class. When you attend class, you are expected to observe the rudiments of civil behavior. Do NOT chat with friends during class—the instructor will inquire as to what the “problem” is. Do NOT sleep, eat, or drink in the class; each of these is an annoyance and a distraction to your colleagues. Do NOT consistently arrive late to class. Do NOT leave in the middle of class. If you have a legitimate reason to exit the classroom early, speak to me before class begins. In short, observe good manners and be considerate of your instructor and your colleagues. Students who persist in disrupting the course in any of the ways mentioned above can expect to have points deducted from their grade. Page 2 of 5
  3. 3. I certainly consider attendance and participation if a student is in serious trouble. In other words: if you are failing the course and have not been attending I don't see why I need to be sympathetic. The reverse is also true: if you are doing poorly and have attended every class I will give you as much benefit of the doubt as I can while still being fair to those who scored higher than you did. 2. Participation: Students are expected to complete the assigned reading prior to class and participate in class discussion. Active positive class participation is encouraged and will reflect a portion of your grade. Participation includes in class discussions, in class activities, and being prepared to answer questions in class. If you don’t volunteer regularly to answer questions in class, I may begin to call you directly. Class participation points will be awarded for both the quantity frequency and quality of discussion and professionalism of your conduct (respecting all classmates and their contributions, and refraining from conduct that is distracting). 3. Homework Assignments: Finance cannot be understood just by listening, you must work problems yourself. You will be assigned homework assignments that must be turned in on the due date at the beginning of the class session. No late assignments will be accepted… no exceptions! You are encouraged to work together on the homework, but do not copy from others and keep in mind that you will not have the help of your peers during the exams. Homework problems will be very similar to exam questions and therefore represent practice for the exam. If you are absent the day homework is due, please make sure a classmate turns in your assignment, send it via email, or turn in the assignment early. 4. Midterm examination: It is scheduled on Friday of the second week of class. Exams will be closed books and notes and will cover materials from lectures, assigned readings, homework assignments, and issues discussed in class. Exams will include both conceptual questions and numerical problems, consisting of multiple choice, true or false, short answer, and analytical problems. In order to receive credit on analytical problems, all intermediate steps must be shown; do not provide an answer without explaining how you derived it step by step. Partial credits will be considered when there are arithmetic errors in calculation. 5. Final examination: It is scheduled on the last Friday of class and will test your understanding of the class material. The format may resemble the midterm examination. The duration of the final exam is two hours. Page 3 of 5
  4. 4. 6. Academic Dishonesty: Cheating will not be tolerated in this class under any circumstances. An honor code violation may result in a variety of disciplinary actions from a failing grade on an assignment to a failing grade in the course. Academic dishonesty includes, but not limited to, bringing unauthorized materials to the tests, unapproved assistance on examinations, copying the homework, looking at, copying from, or colluding with anyone during the tests, plagiarism, etc…. 7. Announcements: This document represents my current plans for the course at the time of writing, but I reserve the right to make adjustments to this syllabus during the course of the semester as deemed necessary for the overall enterprise of the class. Any changes will be communicated promptly and clearly to the students. 8. Communication Devices: Cell phones are to be off during the class. During Exams, no communication devices of any kind are allowed including cell phones, PDAs, and others. Anyone using any such device will be assumed to be seeking, receiving, or giving impermissible assistance to or from source inside or outside the exam room and will be penalized accordingly. Course Outline: The outline provides a general plan for this course; however, I reserve the right to make additions and changes whenever necessary. Materials must be read and/or completed before the day assigned. Bring your texts with you to class. Week 1: Mon: An overview of Financial Management (Ch.1) (Financial Management and the Financial Manager; Forms of Businesses Organization; Goals of Financial Management; Agency Relationships) Tue: Financial Statements, Cash Flow, and Taxes (Ch.3) (Balance sheet; Income statement; Statement of cash flows; Accounting income vs. cash flow) Th: Analysis of Financial Statement (Ch.4) (Ratio Analysis; Du Pont system; Limitations of ratio analysis) Fri: Analysis of Financial Statements (Cont. Ch.4) Page 4 of 5
  5. 5. Week 2: Mon: Time Value of Money (Ch.5) (Cash flow time lines, Future value, Present Value, Annuities, Perpetuities, Uneven cash flows streams, Semiannual and other compounding periods, Rates of Return, Amortization) Tue: Time Value of Money (Cont. Ch.5) Th: Risk and Rate of Return (Ch. 8) (Defining and measuring risk, Expected rate of return, Stand alone risk, Portfolio risk, Risk and Return, CAPM, SML) Fri: Midterm examination Week 3: Mon: Bonds and Their Valuation (Ch. 7) (Key features of bonds, bond valuation, measuring yield, assessing risk) Tue: Bonds and Their Valuation (Cont. Ch. 7) Stocks and Their Valuation (Ch. 9) (Features of common stock, determining common stock values, preferred stock) Th: Stocks and Their Valuation (Cont. Ch. 9) Fri: The Cost of Capital (Ch.10) (Sources of capital, components costs, WACC, flotation costs) Week 4: Mon: The Basics of Capital Budgeting (Ch.11) (Importance of capital budgeting Project Classifications; NPV, IRR, Payback Period, MIRR) Tue: The Basics of Capital Budgeting (Cont. Ch.11) Th: Cash Flow Estimation and Risk Analysis (Ch. 12) (Cash flow estimation; Relevant Cash Flows; Incremental cash flows, Capital Budgeting Project Evaluation) Fri: Final Examination P.S. Syllabus is subject to change Page 5 of 5