Econ 1440-1070: Economics of Corporate Finance Syllabus

1

University of Pittsburgh Department of Economics

CRN: 18363

Econ 1440-1070: Economics of Corporate Finance Syllabus

Lecturer: Svitlana Maksymenko, Ph.D. Office: 4703 WWPH Tel: 412-383-8155 Fax: 412-648-1793 E-mail: [email protected] Class meets Wednesdays 6:00-8.25 pm at 4900 Posvar Hall. Office hours Tuesdays 1:00 -2:30 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail.

Out-of-classroom communication

E-mail is the preferred method of out-of-classroom communication. I will make every effort to answer all e-mails within 24 hours. I will employ a CourseWeb (http://courseweb.pitt.edu) email option to report exam statistics and notify students about changes in the course calendar (if any). It is a student’s responsibility to check the university email account on a regular basis, keep it under quota, or use email forwarding in case an alternative email account is accessed more often.

Course Objectives This course introduces undergraduate students to the theory of Financial Economics and its application to the analysis of corporate finance. Upon completion of this course students will have a deep understanding of:

• financing of the corporation • valuation of future cash flows • capital budgeting, risk, and return • interrelation between investment and financial policies • application of economic theory to the solution of financial problems

At the end of the course, students should be able to critically evaluate possible solutions of financial problems.

Prerequisites

mailto:[email protected]

http://courseweb.pitt.edu/

2

• Macroeconomic and Microeconomic Principles • Business Calculus

Text and Instructional Support

The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 9th ed., published by McGraw Hill, copyright 2010, ISBN 9780073382395 (standard ed) or 9780077246129 (alternate ed). You can also use:

• A companion website: www.mhhe.com/rwj • The Economist.com Edition, the Wall Street Journal Edition, and the Financial

Times Edition. It is a student’s responsibility to purchase the text, read it on a regular basis, and do all homework assignments.

Class rules Your presence in the classroom is required. You must arrive and be at your seat before the time the class starts. Please don’t come to the class late. If you face an emergency, notify me as soon as possible by phone or e-mail. You can rewrite the lecture notes from your colleagues later or ask me for a copy. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if you notify me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb.

http://www.mhhe.com/rwj

3

Assignments Homework assignments are on-line assignments posted on the Courseweb (http://courseweb.pitt.edu), with the deadlines reported in the Course Calendar below. Assignments are not accessible after the date due. Please print and go over each assignment prior to exam: you will find it very helpful. You are encouraged to study in groups. It will make your studies more productive and fun. If you work on the assignment in a team, please inform me about it.

Academic Integrity Students are responsible for familiarizing themselves thoroughly with the university policy of academic integrity and for adhering to it. The rules can be found on the University's Academic Integrity Policies site (Policy 02-03-02, http://www.bc.pitt.edu/policies/policy/02/02-03-02.html). To make a story short: any student caught cheating will fail the course. Help The material of the course is highly cumulative. If you do not understand something, please seek help immediately. You are welcome to come to my office, I will be glad to help.

Grading

Attendance is required but not graded. Remember: missing classes will seriously compromise your performance in the course. I take attendance simultaneously. Participation in “stimulate my thinking” problem-solving activities in the class is the only extra credit I offer (provided you end up on a grade margin). There is no curving. A course grade is computed with the following weights:

• On-line assignments 30 percent • Exam 1 35 percent • Exam 2 35 percent

I compute student’s course grade by incorporating scores earned on exams and homework assignments weighted as indicated above. A student fails the class if a so determined course score is below 60. The rest are graded based on the following scale:

90-100 A range 80-89 B range 70-79 C range 60-69 D range


http://www.bc.pitt.edu/policies/policy/02/02-03-02.html

4

Course Calendar

Date Topic Reading

Jan 4 Overview of Corporate Finance Ch. 1

Jan 11 Financial Statements and Ratios Ch. 2, 3

Jan 18 Long-term Financial Planning and Growth Ch 4

Jan 25 Introduction to Valuation. Cash Flow Valuation Ch 5, 6

Feb 1 Interest Rates and Bond Valuation Ch 7

Feb 8 Stock Valuation. Overview Ch 1-8 Ch 8

Feb 15 Assignments Ch 1-8 are due 6:00pm. Exam # 1

Feb 22 Net Present Value Ch 9

Feb 29 Making Capital Investment Decisions Ch 10

Spring break

March 14 Project Analysis Ch 11

March 21 Capital Market History Ch 12

March 28 Risk and Return. Security Market Line Ch 13

April 4 Cost of Capital Ch 14

April 11 Raising Capital. Overview Ch 9-15 Ch 15

April 18 Assignments Ch 9-15 are due 6:00pm. Exam#2

Economics 1440 Economics of Corporate Finance

Mondays 6:00-8:25 WWPH 4900

Instructor: Scott Kinross Email: [email protected] Course Goals and outline The purpose of this course is to provide you with a basic understanding of how to make investment decisions and how to interpret a company’s financial statements. This will involve studying both applied methodologies and theoretical underpinnings. A secondary goal is to provide you with the analytical tools needed to make these decisions. I have assumed that you are familiar with basic economics, mathematics (i.e. calculus), and statistics. I have also assumed that you are NOT familiar with any finance. Calculus is required for this course. It is strongly recommend that you take this course at a latter time if you are not of the mathematical persuasion, or up to the task of working hard to “re-learn” the techniques at which you’ve become rusty. The semester will be broken into two parts. The first half of the course will introduce you to some basic tools for doing finance. We will first learn how to interpret accounting statements and cash flows. You will be able to read and interpret all financial statements, as well as perform ratio and peer group analysis when we are finished with this. Then we will look at valuation techniques for valuing stocks, bonds, portfolios and a few hybrid investment vehicles. This will involve prior knowledge of geometric series (both finite and infinite) as well as some multivariate calculus. You will be able to theoretically price all of the before mentioned assets as well as have an intuition as to what moves these prices. Finally, we will explore risk and capital markets, which will require your skills at calculus and linear algebra. Basic statistics is incorporated in all of this as well. You should be familiar with random variables, measures of dispersion, central tendencies and discrete and continuous distribution functions. You will be able to derive the CAPM, Mean-Variance Efficient Frontier, and the optimal portfolio allocation for several risky assets. The second half of the course should be much more interesting and the topics will be chosen by committee. The hope is to introduce you to various advanced topics in finance. I hope to study derivative pricing, behavioral finance, and Foreign Exchange Trading. I will also provide many handouts and supplementary material to guide you through this relatively difficult material. After this second half you will be very


knowledgeable on options. You will be able to derive the Black-Scholls option pricing formulae, replicate the arguments of the put-call parity, and fully appreciate the term “Random Walk” as a theoretical pricing instrument and mathematical entity. Required Readings

The books for this course are; Financial Intelligence by Berman & Knight and A Random Walk Down Wall Street by Burton Malkiel (BM). Financial Intelligence seems to get at the core of what non-accountants need in order to understand the use of financial statements. It is my fist time using it and I am optimistic. You must keep up with the readings for BM, which is an amazing book and I highly recommend taking this opportunity to read it. I also strongly recommend reading the Wall Street Journal. It is a good idea to get in the habit of reading this publication if you intend to do anything in the real world related to finance, business or economics. I strongly urge you to request additional topics for lecture. This is an advanced elective course and should be both educational and entertaining. Please let me know if there is something you are interested in studying. I will do my best to accommodate any and all requests. Grading You will be graded on a Midterm, Homework Assignments, a Group Project as a final exam, and class participation. These will all receive equal weightings of 25%. Exams will be based on what we discuss in class. Due to the advanced level of the course and depth of prerequisite knowledge, the final grades will be curved on a ten point interval scale (90-100 A, 80-90 B, etc.). It is essential for you to engage the material. I urge you to drop the class if you are not enthusiastic about studying this material, do not plan on attending class and are not interested in talking about the material in class.

Late homework assignments/ group projects are not permitted. The due date will be posted on the first page of the assignment. You will receive a zero if I do not have it before the specified date and time. Finally, there are no make up exams. Thank you for enrolling in this class. I hope to have an enjoyable semester with you.

Week Topic Financial Intelligence Topic BM

Presentations

27-Aug First Class

3-Sep No Class

10-Sep Income Statement (Pt1 & 2) Chapters 1,2,3

17-Sep Cash Flow Analysis & Time Value of Money Balance Sheet (Pt 3) Chapters 4,5

24-Sep Valuation Cash (Pt 4) Chapters 6,7

1-Oct Statistics Review Ratios (Pt 5) Chapters 8,9

8-Oct No Class

15-Oct Risk, Return & CAPM ROI (Pt 6) Chapter 10, 11

22-Oct Capital Budgeting Working Capital (Pt 7) Chapters 12

29-Oct Cost of Capital Financial Literacy (Pt 8) Chapter 13,14

5-Nov Behavioral Finance Chapter 15

12-Nov Exam

19-Nov Options & Other Financial Instruments

26-Nov FOREX

3-Dec Final

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CRN: 28339

Econ 1440: Economics of Corporate Finance Syllabus

Lecturer: Svitlana Maksymenko, Ph.D. Office: 4703 WWPH Tel: 412-383-8155 Fax: 412-648-1793 E-mail: [email protected] Class meets Tuesdays and Thursdays 4:00-5:15 pm at 363 CL. Office hours Tuesdays 12:00 -1:00 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail.




• financing of the corporation • valuation of future cash flows, stocks and bonds • capital budgeting, risk, and return • interrelation between investment and financial policies

At the end of the course, students should be able to apply economic theory to the solution of financial problems and critically evaluate possible options available for corporation.

Prerequisites



2



The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 9th ed., published by McGraw Hill, copyright 2010, ISBN 9780073382395 (standard ed) or 9780077246129 (alternate ed). You can also use a companion website: www.mhhe.com/rwj It is a student’s responsibility to purchase the text, read it on a regular basis, and do all homework assignments.

Class rules Your presence in the classroom is required. You must arrive and be at your seat before the time the class starts. Please don’t come to the class late. If you face an emergency, notify me as soon as possible by phone or e-mail. You can rewrite the lecture notes from your colleagues later or ask me for a copy. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if you notify me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb. Assignments


3

Homework assignments are on-line assignments posted on the Courseweb (http://courseweb.pitt.edu), with the deadlines reported in the Course Calendar below. Assignments are not accessible after the date due. Please print and go over each assignment prior to exam: you will find it very helpful. You are encouraged to study in groups. It will make your studies more productive and fun. If you work on the assignment in a team, please inform me about it.


Grading




90-100 A-, A, A+ 80-89 B-, B, B+ 70-79 C-, C, C+ 60-69 D-, D, D+



4

Course Calendar

Date Topic Reading

Jan 7, 9 Overview of Corporate Finance Ch. 1

Jan 14, 16 Financial Statements Ch. 2

Jan 21, 23 Ratio Analysis Ch 3

Jan 28, 30 Long-term Financial Planning and Growth Ch 4

Feb 4 Feb 6

Introduction to Valuation. Cash Flow Valuation

Ch 5 Ch6

Feb 11, 13

Bond Valuation

Ch 7

Feb 18, 20

Stock Valuation

Ch8

Feb 25 Feb 27

Overview Ch1-8 Assignments Ch 1-8 are due 4:00pm. Exam # 1

Mar 4, 6 Capital Budgeting: Net Present Value Ch 9

Spring break

March 18, 20 Capital Investment Decisions Ch 10

March 25, 27 Project Analysis Ch 11

Apr 1 Apr 3

Capital Market History. Risk and Return. Security Market Line

Ch 12 Ch13

April 8, 10

Cost of Capital

Ch 14

April 15 April 17

Overview Ch 9-14 Assignments Ch 9-14 are due 4:00pm.Exam#2

1


CRN: 28984


Lecturer: Svitlana Maksymenko, Ph.D. Office: 4703 WWPH Tel: 412-383-8155 Fax: 412-648-1793 E-mail: [email protected] Class meets Wednesdays 6:00-8.25 pm at 4900 Posvar Hall. Office hours Tuesdays 12:00 -1:00 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail.






Prerequisites



2



The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 9th ed., published by McGraw Hill, copyright 2010, ISBN 9780073382395 (standard ed) or 9780077246129 (alternate ed). You can also use a companion website: www.mhhe.com/rwj It is a student’s responsibility to purchase the text, read it on a regular basis, and do all homework assignments.

Class rules Your presence in the classroom is required. You must arrive and be at your seat before the time the class starts. Please don’t come to the class late. If you face an emergency, notify me as soon as possible by phone or e-mail. You can rewrite the lecture notes from your colleagues later or ask me for a copy. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if you notify me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb. Assignments


3

Homework assignments are on-line assignments posted on the Courseweb (http://courseweb.pitt.edu), with the deadlines reported in the Course Calendar below. Assignments are not accessible after the date due. Please print and go over each assignment prior to exam: you will find it very helpful. You are encouraged to study in groups. It will make your studies more productive and fun. If you work on the assignment in a team, please inform me about it.


Grading




90-100 A-, A, A+ 80-89 B-, B, B+ 70-79 C-, C, C+ 60-69 D-, D, D+



4

Course Calendar

Date Topic Reading


Jan 15 Financial Statements Ch. 2

Jan 22 Ratio Analysis Ch 3


Feb 5 Introduction to Valuation. Cash Flow Valuation Ch 5-6

Feb 12 Bond Valuation Ch 7

Feb 19 Stock Valuation. Overview Ch1-8 Ch8


Mar 5 Capital Budgeting: Net Present Value Ch 9

Spring break

March 19 Capital Investment Decisions Ch 10

March 26 Project Analysis Ch 11

Apr 2 Capital Market History. Risk and Return. Security Market Line

Ch 12-13

April 9 Cost of Capital Ch 14


1


CRN: 17949


Lecturer: Svitlana Maksymenko, Ph.D. Office: 4703 Posvar Hall Tel: 412-383-8155 Fax: 412-648-1793 E-mail: [email protected] Class meets Tuesday, Thursdays and Fridays 8:30 – 11:45am at 253 Cathedral of Learning. Office hours Tuesdays 12:00 -1:00 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail. Out-of-classroom communication E-mail is the preferred method of out-of-classroom communication. I will make every effort to answer all e-mails within 24 hours. I will employ a CourseWeb (http://courseweb.pitt.edu) email option to report exam statistics and notify students about changes in the course calendar (if any). It is a student’s responsibility to check the university email account on a regular basis, keep it under quota, or use email forwarding in case an alternative email account is accessed more often.


• balance sheet and income statement • financing of the corporation • valuation of future cash flows, stocks and bonds • capital budgeting, impact of risk on return • interrelation between investment and financial policies

At the end of the course, students should be able to critically evaluate financial problems and know how to apply economic theory in order to solve them.

Prerequisites

• Macroeconomic and Microeconomic Principles



2

• Business Calculus

Text and Instructional Support The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 9th ed., published by McGraw Hill, copyright 2010, ISBN 9780073382395 (standard ed) or 9780077246129 (alternate ed). Students can also use:



Class rules Student’s presence in the classroom is required. Students must arrive and be at their seats before the time the class starts. Please don’t come to the class late. If you face an emergency, notify me as soon as possible by phone or e-mail. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if a student notifies me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students’ scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb. Assignments


3

Homework assignments are on-line assignments posted on the Courseweb (http://courseweb.pitt.edu), with the deadlines reported in the Course Calendar below. Assignments are not accessible after the date due. Please print and go over each assignment prior to exam: you will find it very helpful. Students are encouraged to study in groups, however should submit homework assignments individually.

Academic Integrity Students are responsible for familiarizing themselves thoroughly with the university policy of academic integrity and for adhering to it. The rules can be found on the University's Academic Integrity Policies site (Policy 02-03-02, http://www.bc.pitt.edu/policies/policy/02/02-03-02.html). To make a story short: any student caught cheating will fail the course. Help The material of the course is highly cumulative. If you do not understand something, please seek help immediately. You are welcome to come to my office, I will be glad to work with you.

Grading




90-100 A-, A, and A+ 80-89 B-, B, and B+ 70-79 C-, C, and C+ 60-69 D-, D, and D+



4

Course Calendar

Date Topic Reading

June 10 Overview of Corporate Finance Ch. 1

June 12 Financial Statements and Ratios Ch. 2, 3

June 13 Long-term Financial Planning and Growth Ch 4

Homework assignments Ch 1-4 are due June 17, 8:30am

June 17 Introduction to Valuation. Cash Flow Valuation Ch 5, 6

June 19 Interest Rates and Bond Valuation Ch 7

June 20 Stock Valuation Ch 8

Homework assignments Ch 5-8 are due June 24 8:30am

June 24 Exam #1 (Ch 1-8)

June 26 Net Present Value Ch 9

June 27 Making Capital Investment Decisions. Project Analysis Ch 10, 11

July 1 Capital Market History. Risk and Return. Security Market Line

Ch 12, 13

July 3 Homework assignments Ch 9- 13 are due July 3 8:30am, Exam#2 (Ch 9-13)

1


CRN: 22285


Lecturer: Svitlana Maksymenko, Ph.D. Office: 4703 Posvar Hall Tel: 412-383-8155 Fax: 412-648-1793 E-mail: [email protected] Class meets Wednesdays 6:00 – 8:25pm at Posvar hall 4900. Office hours Tuesdays and Thursdays 2:00 -3:45 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail. Out-of-classroom communication E-mail is the preferred method of out-of-classroom communication. I will make every effort to answer all e-mails within 24 hours. I will employ a CourseWeb (http://courseweb.pitt.edu) email option to report exam statistics and notify students about changes in the course calendar (if any). It is a student’s responsibility to check the university email account on a regular basis, keep it under quota, or use email forwarding in case an alternative email account is accessed more often.


• balance sheet and income statement • financing of the corporation • valuation of future cash flows, stocks and bonds • capital budgeting, impact of risk on return • interrelation between investment and financial policies

At the end of the course, students should be able to critically evaluate financial problems and know how to apply economic theory in order to solve them.

Prerequisites




2


The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 10th ed., published by McGraw Hill, copyright 2013, ISBN 978-007-803463-3 (standard ed) or 978-007-747945-9 (alternate ed). Students can also use:



Class rules Student’s presence in the classroom is required. Students must arrive and be at their seats before the time the class starts. Please don’t come to the class late. If you face an emergency, notify me as soon as possible by phone or e-mail. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if a student notifies me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students’ scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb. Assignments


3

Homework assignments are on-line assignments posted on the Courseweb (http://courseweb.pitt.edu), with the deadlines reported in the Course Calendar below. Assignments are not accessible after the date due. Please print and go over each assignment prior to exam: you will find it very helpful. Students are encouraged to study in groups, however should submit homework assignments individually.

Academic Integrity Students are responsible for familiarizing themselves thoroughly with the university policy of academic integrity and for adhering to it. The rules can be found on the University's Academic Integrity Policies site (Policy 02-03-02, http://www.bc.pitt.edu/policies/policy/02/02-03-02.html). To make a story short: any student caught cheating will fail the course. Help The material of the course is highly cumulative. If you do not understand something, please seek help immediately. You are welcome to come to my office, I will be glad to work with you.

Grading


• On-line assignments 25 percent • Exam 1 25 percent • Exam 2 25 percent • Exam 3 25 percent


90-100 A-, A, and A+ 80-89 B-, B, and B+ 70-79 C-, C, and C+ 60-69 D-, D, and D+



4

Course Calendar

Date Topic Reading

Aug 27 Overview of Corporate Finance Ch. 1

Sept 3 Financial Statements Ch. 2

Sept 10 Financial Ratios Ch 3

Sept 17 Long-term Financial Planning and Growth Ch 4

Sept 24 Homework assignments Ch 1-4 are due 6:00pm Exam#1

Oct 1 Introduction to Valuation Ch 5

Oct 8 Cash Flow Valuations Ch 6

Oct 15 Interest Rates and Bond Valuation Ch 7

Oct 22 Stock Valuation Ch 8

Oct 29 Homework assignments Ch 5-8 are due 6pm. Exam#2

Nov 5 Net Present Value and Investment Criteria Ch 9

Nov 12 Making Capital Investment Decisions. Project Analysis Ch 10, 11

Nov 19 Capital Market History Ch 12

Nov 26 No classes. Thanksgiving break

Dec 3 Risk , Return, and Security Market Line Ch 13

Dec 10 Homework assignments Ch 9- 13 are due 6pm Exam#3

Please do not forget to fill in my Teaching Evaluation survey on-line! It is very important for me to have your feedback and to know how you enjoyed the class. Thank you!

1


Econ 1440: Economics of Corporate Finance

Syllabus Lecturer: Svitlana Maksymenko, Ph.D. Office: 4703 WWPH Tel: 412-383-8155 Fax: 412-648-1793 E-mail: [email protected] Class meets Wednesdays 6:00-8.25 pm at 4900 Posvar Hall. Office hours Mondays 3-5 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail.






Prerequisites

• Macroeconomic and Microeconomic Principles



2

• Business Calculus

Text and Instructional Support The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 10th ed., published by McGraw Hill, copyright 2013, ISBN 978-007-803463-3 (standard ed) or 978-007-747945-9 (alternate ed). It is a student’s responsibility to purchase the text, read it on a regular basis, and do all homework assignments.

Class rules Your presence in the classroom is required. I will take attendance simultaneously. You must arrive and be at your seat before the time the class starts. If you face an emergency, notify me as soon as possible by phone or e-mail. You can rewrite the lecture notes from your colleagues later, or ask me for a copy. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if you notify me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb. Assignments Homework assignments are on-line assignments posted on the Courseweb (http://courseweb.pitt.edu), with the deadlines reported in the Course Calendar below. Assignments are not accessible after the date due. Please print and go over each


3

assignment prior to exam: you will find it very helpful. You are encouraged to study in groups. It will make your studies more productive and fun. If you work on the assignment in a team, please inform me about it.


Grading

Attendance is required; I will take it simultaneously. Remember: missing classes will compromise your performance in the course. Participation in problem-solving activities in the class is part of the grade: each student will get 0.5 points for trying the assignment, another 0.5 points for solving the problem correctly, and extra 0.5 points for solving the problem first in the class. There is no curving. A course grade is computed with the following weights:

• On-line homework assignments 20 percent • In-class assignments 5 percent • Exam 1 25 percent • Exam 2 25 percent • Exam 3 25 percent


90-100 A-, A, A+ 80-89 B-, B, B+ 70-79 C-, C, C+ 60-69 D-, D, D+


4

Course Calendar

Date Topic Reading


Jan 14 Financial Statements Ch. 2

Jan 21 Ratio Analysis Ch 3




Feb 18 Bond Valuation Ch7

Feb 25 Stock Valuation. Overview Ch1-8 Ch8

Mar 4 Assignments Ch 1-8 are due 6:00pm. Exam # 2

Spring break

March 18 Capital Budgeting: Net Present Value and Investment Criteria

Ch 9

March 25 Capital Investment Decisions. Project Analysis Ch 10-11

Apr 1 Capital Market History. Ch 12

April 8 Risk and Return. Security Market Line Ch 13



CRN 25420


Lecturer: Svitlana Maksymenko, Ph.D. Office: Posvar Hall 4703 Tel: 412-383-8155 E-mail: [email protected] Office hours: Mondays 3-5pm

Teaching assistant: Yi Han Office: Posvar 4513 Tel: 412-383-2825 E-mail: [email protected] Office hours: Mondays and Wednesdays 3-5pm

Class meets Mondays 6:00-8.25 pm at 4900 Posvar Hall. Office hours Mondays 3-5 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail.









Prerequisites



The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 11th ed., published by McGraw Hill, copyright 2016, ISBN 978-007-786170-4 (standard ed). It is a student’s responsibility to purchase the text, read it on a regular basis, and do all homework assignments.

Class rules Your presence in the classroom is required. I will take attendance simultaneously. You must arrive and be at your seat before the time the class starts. If you face an emergency, notify me as soon as possible by phone or e-mail. You can rewrite the lecture notes from your colleagues later, or ask me for a copy. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if you notify me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb. Assignments

Homework assignments are on-line assignments, with the deadlines reported in the Course Calendar below. Instructions how to access these on-line assignments are posted on the Courseweb. Assignments are not accessible after the date due. Please print and go over each assignment prior to exam: you will find it very helpful. You are encouraged to study in groups. It will make your studies more productive and fun. If you work on the assignment in a team, please inform me about it.


Grading


• On-line homework assignments 25 percent • Exam 1 25 percent • Exam 2 25 percent • Exam 3 25 percent


90-100 A-, A, A+ 80-89 B-, B, B+ 70-79 C-, C, C+ 60-69 D-, D, D+


Course Calendar

Date Topic Reading


Jan 18 Martin Luther Day’s observance

Jan 25 Financial Statements Ch 2

Feb 1 Ratio Analysis Ch 3

Feb 8 Long-term Financial Planning and Growth. Overview Ch 1-4 Ch 4



Feb 29 Bond Valuation Ch7

Mar 7 Spring break

Mar 14 Stock Valuation. Overview Ch5-8 Ch8

Mar 28 Assignments Ch 5-8 are due 6:00pm. Exam # 2

Apr 4 Capital Budgeting: Net Present Value and Investment Criteria

Ch 9

Apr 11 Capital Investment Decisions. Project Analysis Ch 10-11

Apr 18 Capital Market History. Risk and Return. Security Market Line

Ch 12-13

Please take a moment to fill in my teaching evaluations survey on-line. I care about the quality of teaching at our department and appreciate your comments and ranking in advance! April 25 Assignments Ch 9-13 are due 6:00pm. Exam#3


CRN 30287


Lecturer: Svitlana Maksymenko, Ph.D. Office: Posvar Hall 4703 Tel: 412-383-8155 E-mail: [email protected] Office hours: Mondays 3-5pm

Teaching assistant: Yi Han Office: Posvar 4513 Tel: 412-383-2825 E-mail: [email protected] Office hours: Mondays and Wednesdays 3-5pm

Class meets Tuesdays and Thursdays 2:30-3.45 pm at Cathedral of Learning 363. Office hours Mondays 3-5 pm. Additional hours are available by appointment and must be scheduled at least a day in advance via e-mail.









Prerequisites



The text is Fundamentals of Corporate Finance by Ross/Westerfield/Jordan, 11th ed., published by McGraw Hill, copyright 2016, ISBN 978-007-786170-4 (standard ed). It is a student’s responsibility to purchase the text, read it on a regular basis, and do all homework assignments.

Class rules Your presence in the classroom is required. I will take attendance simultaneously. You must arrive and be at your seat before the time the class starts. If you face an emergency, notify me as soon as possible by phone or e-mail. You can rewrite the lecture notes from your colleagues later, or ask me for a copy. While in class, I will not allow students to make noise or otherwise distract their classmates. If you want to ask a question, raise your hand and I will call on you. The use of cellular phones, pagers, and other similar devices is prohibited. Students with disabilities Any student with a need for special accommodation due to disability should inform me of this. The Disability Resources and Services Office (216 William Pitt Union, 412-624-7890) will verify disability and will coordinate needed accommodations. Class cancellations Any class cancellations due to bad weather are determined by the university administration and are announced on the university web site. Exams Dates of the exams are contained in the detailed plan of the course below. Exams include multiple choice questions, and a problem solving section. Exams are not cumulative. I do not offer make-up exams, with one exception: if you notify me or the department secretary of a serious reason (such as hospitalization) for missing an exam. This notification should be given prior to the exam. After each exam, I post answer keys, students scores, and exam statistics (i.e. class average, class highest, and class lowest scores) on the Courseweb. Assignments

Homework assignments are on-line assignments, with the deadlines reported in the Course Calendar below. Instructions how to access these on-line assignments are posted on the Courseweb. Assignments are not accessible after the date due. Please print and go over each assignment prior to exam: you will find it very helpful. You are encouraged to study in groups. It will make your studies more productive and fun. If you work on the assignment in a team, please inform me about it.


Grading


• On-line homework assignments 25 percent • Exam 1 25 percent • Exam 2 25 percent • Exam 3 25 percent


90-100 A-, A, A+ 80-89 B-, B, B+ 70-79 C-, C, C+ 60-69 D-, D, D+


Course Calendar

Date Lecture Reading

Jan 7 An Introduction Jan 12 Jan 14

Overview of Corporate Finance Financial Statements

Ch1 Ch2

Jan 19 Jan 21

Ratio analysis Ch3

Jan 26 Jan 28

Long-term financial planning and growth Ch4

Feb 2 Feb 4

Overview Ch1-4 Assignment #1 (Ch 1-4) is due 2:30pm. Exam # 1

Feb 9 Feb 11

Introduction to valuation theory

Ch5

Feb 16 Feb 18

Cash flow valuation Ch6

Feb 23 Feb 25

Bond valuation Ch7

Mar 1 Mar 3

Stock valuation Ch8

Spring Break

Mar 15 Mar 17

Overview Ch 5-9 Assignment #2 (Ch 5-9) is due 2:30 pm. Exam #2

Mar 22 Mar 24

Capital budgeting: NPV and other investment criteria Ch9

Mar 29 Mar 31

Capital investment decisions Project analysis

Ch10 Ch11

Apr 5 Apr 7

Capital market history Ch12

Apr 12 Apr 14

Risk and return. Security market line Ch13

Please take a moment to fill in my teaching evaluation survey on-line. I care about quality of teaching at our department and appreciate your comments in advance. Apr 19 Apr 21

Ch9-13 Overview Assignment #3 (Ch9-13) is due 2:30pm. Exam # 3

Econ 1440-1070: Economics of Corporate Finance Syllabus

Documents

Transcript of Econ 1440-1070: Economics of Corporate Finance Syllabus