Faculty of Commerce and Economics School of Banking and Finance FINS5511 CORPORATE FINANCE

Transcription

1 Faculty of Commerce and Economics School of Banking and Finance FINS5511 CORPORATE FINANCE COURSE OUTLINE SUMMER, 2007 FINS5511 Corporate Finance Page- 1

2 1. COURSE STAFF Communication with Staff 3 2. INFORMATION ABOUT THE COURSE Teaching times and Locations Units of Credit Parallel teaching in the course Relationship of this course to other course offerings Approach to learning and teaching 3 3. COURSE AIMS AND OUTCOMES Course Aims Student Learning Outcomes Teaching Strategies 4 4. STUDENT RESPONSIBILITIES AND CONDUCT Workload Attendance General Conduct and Behaviour Keeping informed 5 5. LEARNING ASSESSMENT Assessment Details Special Consideration and Supplementary examinations 7 6. ACADEMIC HONESTY AND PLAGIARISM 7 7. STUDENT RESOURCES Course Resources Other Resources, Support and Information 9 8. CONTINUAL COURSE IMPROVEMENT COURSE SCHEDULE 11 FINS5511 Corporate Finance Page- 2

3 1. COURSE STAFF Course Coordinator Other teaching staff Dr. Wai-Man Raymond Liu Dr. Donghui Li Location: QUAD 3050 Location: QUAD 3040 Contact no.: (02) Contact no.: (02) Consultation: 2pm 4pm Thursday Consultation: 9am 11am Wednesday 1.1 Communication with Staff General enquiries should be directed to course coordinator, Dr. Liu. Specific enquiries regarding course materials should be directed to the lecturer teaching each section of the course. Announcements will be made periodically on WebCT. 2. INFORMATION ABOUT THE COURSE 2.1 Teaching times and Locations Lecture time: Thursday, 9:00-12:00 Thursday, 18:00-21:00 Lecture location: Law Theatre G23 Electrical Engineering G Units of Credit This course has 6 units of credit and 3 contact hours per week. 2.3 Parallel teaching in the course There is no parallel teaching (UG/PG) involved in this course. 2.4 Relationship of this course to other course offerings This course is designed to introduce essential aspects of financial decision-making in business. It provides basic techniques which cover investment decisions, financing decisions and dividend decisions. This course is a core requirement for those who undertake Master of Professional Accounting and the prerequisite/corequisite courses are ACC5930 and ECON5103. For those who undertake Master of Commerce, the corequisite courses are COMM5001, COMM5002 and COMM5003. This course is closely related to FINS5516 but it has a strong focus on the Australian capital market. 2.5 Approach to learning and teaching Our teaching philosophy is to equip students with skills to learn and think critically. We believe that an effective approach to teach is to inspire students through engaging their interest and enthusiasm and help them to actively engage in the learning process. To achieve this, we introduce online learning and in-class exercises and materials are brought to the realm of real-world practice as students see the relevance of their studies to professional, disciplinary and personal context. FINS5511 Corporate Finance Page- 3

4 We encourage students to form small groups to discuss questions, problems, and issues surrounding each topic. Learning cooperatively with peers rather than in an individualistic or competitive way always helps students to develop interpersonal, professional and cognitive skills to a higher level. The objective of online study resource is to help students to learn the complex content covered this session and make the most of student s limited study time. It is designed to give students the chance to practice, revise and focus on each topic until they completely understand the materials. The e-workbook contains interactive practice questions and problem solving exercises for most topics and it is also being used to deliver interactive assessment tasks that will contribute to your overall assessment marks for this unit. 3. COURSE AIMS AND OUTCOMES 3.1 Course Aims This course is an introductory course in financial management. It stresses the modern fundamentals of corporate financial decision making with special reference to investment, financing and dividend distribution. While building upon introductory courses in accounting, economics and quantitative analysis the course develops distinctive conceptual frameworks and specialised tools for solving real world financial problems at both the individual and corporate level. The course is a blend of theory and practice. While diligent practice will make you competent in financial techniques, a good grasp of theory will help you think systematically about ways to solve a problem for which no existing technique is suitable or available. Specific topics to be covered include: financial mathematics, security valuation, techniques for capital investment decisions, financial decision making under uncertainty (portfolio theory and capital market theory), corporate capital structure, cost of capital, dividend decision and policy, mergers and acquisitions. 3.2 Student Learning Outcomes By the end of this course, you should have developed basic knowledge and skills in analysing a range of real-life financial situation using the concepts, frameworks and theories learned throughout the course. These decisions problems include: consumption and investment decision under certainty; valuation of corporate securities; capital budgeting under certainty; capital budgeting under uncertainty; investment decisions; corporate capital structure decisions; dividend decisions and policy; capital raising decisions; mergers and acquisitions decisions. 3.3 Teaching Strategies Lectures are conducted in 3-hour blocks with approximately 2 hrs on lecture and 1 hour on working through suggested problems and questions. Students are required to attempt suggested problems and questions prior to the lecture. We will distribute additional exercises in the class and students are FINS5511 Corporate Finance Page- 4

5 required to complete them and submit them by the end of the lecture. Outside the lecture, students are required to create an e-workbook account with Perdisco: and attempt online tutorials questions and complete all assessment questions. We encourage students to form study groups to engage in interactive discussion. Students are also encouraged to use online discussion forum on the WebCT as a venue to engage in discussion. 4. STUDENT RESPONSIBILITIES AND CONDUCT 4.1 Workload It is expected that you will spend at least ten hours per week studying this course. This time should be made up of reading, research, working on exercises and problems, and attending classes. In periods where you need to prepare for examinations, the workload may be greater. Over-commitment has been a cause of failure for many students. You should take the required workload into account when planning how to balance study with employment and other activities. 4.2 Attendance Your regular and punctual attendance at lectures and seminars is expected in this course. University regulations indicate that if students attend less than eighty per cent of scheduled classes they may be refused final assessment. 4.3 General Conduct and Behaviour You are expected to conduct yourself with consideration and respect for the needs of your fellow students and teaching staff. Conduct which unduly disrupts or interferes with a class, such as ringing or talking on mobile phones, is not acceptable and students may be asked to leave the class. More information on student conduct is available at: Keeping informed You should take note of all announcements made in lectures or on the course WebCT site. Most information about this course is available online through WebCT and you are expected to be fully aware of resources on the course WebCT site. From time to time, the University will send important announcements to your university address without providing you with a paper copy. You will be deemed to have received this information. 5. LEARNING ASSESSMENT 5.1 Formal Requirements To pass this course, you must: achieve a composite mark of at least 50; and make a satisfactory attempt at all assessment tasks (see below). FINS5511 Corporate Finance Page- 5

6 5.2 Assessment Details Assessment in this course is based on 1. solving questions and problems in the class (10%), 2. online assessment (2%) 3. the mid-session examination (40%) and 4. the final examination (50%). The assessment is designed to reinforce our stated learning objectives. Students must attend both the mid-session examination and the final examination. Students must pass the mid-session examination in order to pass the course. In-class exercises: This assessment component will be based upon five in-class group work (2% each). You will form groups of two and work on some questions and problems collaboratively. This activity will take 30 minutes of the tutorial time. Date & time: Lectures 3, 4, 6, 11 & 13 Weight: 5 2% = 10% of overall assessment The purpose of this assessment is to foster a habit of practising with exam-like quantitative questions and problems. It should help you to recall and/or improve your problem solving skills. This is also an opportunity to clear out issues and misconceptions about fundamental concepts discussed in the first few lectures. Online assessment: Students are required to complete five online assessment tasks (2% each) within 2 weeks after a relevant topic is taught. In doing so, students must create an e- workbook account with Perdisco: The e-workbook is being used to deliver interactive assessment tasks that will contribute to the overall assessment marks for this course. The assessments can be submitted online from anywhere, are marked instantly and give you immediate feedback on your performance. Date & time: any time within 2 weeks after a relevant topic is taught. Weight: 10% of overall assessment Mid-session examination: Date & time: Thursday 19 April 2006 (Lecture 7) Location: Usual lecture venue Duration: 2 hours Weight: 40% of overall assessment The mid-session examination tests materials covered in the text, lecture notes and any supplementary reading during the first 6 lectures. It will be comprised of multiple-choice and written questions. The examination is closed book. Midsession exam questions are set so that students have in-depth understanding of early materials, as they are the necessary foundation for the latter part of the course. You are expected to show that you have the necessary skills and knowledge to think systematically about ways to solve a financial problem. This is also an opportunity to provide some early feedbacks on your progress in the course. Final examination: Date & time: During the UNSW Exam Week Location: To be advised FINS5511 Corporate Finance Page- 6

7 Duration: Weight: 2.5 hours 40% of overall assessment The final examination tests materials covered in the textbook, lecture notes and any supplementary reading from lecture 7 onwards. It will be comprised of multiplechoice and written questions. The examination is closed book. Students are expected to show that they have the necessary skills and knowledge to think systematically about ways to solve a financial problem. All exams are conducted in accordance with the UNSW Rules for the Conduct of Examinations and it is the student s responsibility to be familiar with these rules. For more information, refer to the UNSW examination website at: Special Consideration and Supplementary examinations Students should be aware of special consideration rules and supplementary examinations, which can be found: Specifically: Applications for special consideration (including supplementary examinations) must go through UNSW Central administration (within 3 working days of the assessment to which it refers) applications will not be accepted by teaching staff; Applying for special consideration does not automatically mean that you will be granted additional assessment or that you will be awarded an amended result; If you are making an application for special consideration (through UNSW Central Administration) please notify your Lecturer in Charge; Please note: a register of applications for Special Consideration is maintained. History of previous applications for Special Consideration is taken into account when considering each case. 6. ACADEMIC HONESTY AND PLAGIARISM The University regards plagiarism as a form of academic misconduct, and has very strict rules regarding plagiarism. For full information regarding policies, penalties and information to help you avoid plagiarism see: Plagiarism is the presentation of the thoughts or work of another as one s own.* Examples include: direct duplication of the thoughts or work of another, including by copying work, or knowingly permitting it to be copied. This includes copying material, ideas or concepts from a book, article, report or other written document (whether published or unpublished), composition, artwork, design, drawing, circuitry, computer program or FINS5511 Corporate Finance Page- 7

8 software, web site, Internet, other electronic resource, or another person s assignment without appropriate acknowledgement; paraphrasing another person s work with very minor changes keeping the meaning, form and/or progression of ideas of the original; piecing together sections of the work of others into a new whole; presenting an assessment item as independent work when it has been produced in whole or part in collusion with other people, for example, another student or a tutor; and, claiming credit for a proportion a work contributed to a group assessment item that is greater than that actually contributed. Submitting an assessment item that has already been submitted for academic credit elsewhere may also be considered plagiarism. The inclusion of the thoughts or work of another with attribution appropriate to the academic discipline does not amount to plagiarism. Students are reminded of their Rights and Responsibilities in respect of plagiarism, as set out in the University Undergraduate and Postgraduate Handbooks, and are encouraged to seek advice from academic staff whenever necessary to ensure they avoid plagiarism in all its forms. The Learning Centre website is the central University online resource for staff and student information on plagiarism and academic honesty. It can be located at: The Learning Centre also provides substantial educational written materials, workshops, and tutorials to aid students, for example, in: correct referencing practices; paraphrasing, summarising, essay writing, and time management; appropriate use of, and attribution for, a range of materials including text, images, formulae and concepts. Individual assistance is available on request from The Learning Centre. Students are also reminded that careful time management is an important part of study and one of the identified causes of plagiarism is poor time management. Students should allow sufficient time for research, drafting, and the proper referencing of sources in preparing all assessment items. * Based on that proposed to the University of Newcastle by the St James Ethics Centre. Used with kind permission from the University of Newcastle Adapted with kind permission from the University of Melbourne. 7. STUDENT RESOURCES 7.1 Course Resources Prescribed textbook: Peireson, G., Brown, R., Easton, S., Howard, P. & Pinder S. Business Finance, McGraw-Hill, 9 th edition, FINS5511 Corporate Finance Page- 8

9 The book is available at the UNSW bookshop. Students should buy a shrink-wrapped package which also includes MaxMark. MaxMark allows access to practice on multiple choice questions on each of the chapters of the text. Online resources: Students are required to subscribe the e-workbook provided by Perdisco at the cost of $34.10 for unlimited access throughout the session. It contains a pool of practice questions and problem solving exercises for most topics and assessment questions for 5 topics. Additional articles: Hard copies of additional articles should be collected in the lecture if they are not available on the WebCT. In addition to the textbook, each week the lecturer may distribute articles that form as a part of required reading. Students are expected to read these articles prior to the class and discuss them during the lecture. For each article students are advised to: (i) summarize the main points; (ii) try to answer all assigned questions (if there is any) and (iii) try to understand how each reading adds to the coverage of corresponding materials in the Ross et al s textbook and accompanying lecture slides. Contents of the articles are examinable. Other references: Myers, S. & Brealey, R. A. Principles of Corporate Finance, McGraw-Hill, 7 th edition, Chew, D. H. (eds) The New Corporate Finance Where Theory Meets Practice, McGraw-Hill, 3 rd edition, Students are expected to read the financial press regularly e.g. Australian Financial Review, Sydney Morning Herald, Business Review Weekly etc. WebCT Vista: Students should make extensive use of WebCT course site. The WebCT course site includes the following: Relevant questions and practice problems to each topic; Worked solutions to all questions and practice problems; A discussion forum that allows students to engage in public online discussions about the course; Your assessment results; Important announcements that are related to the course; The WebCT site for this course can be accessed from the WebCT Vista log-in page: Other Resources, Support and Information The University and the Faculty provide a wide range of support services for students, including: Learning and study support; Counselling support - Library training and support services - FINS5511 Corporate Finance Page- 9

10 Disability Support Services Those students who have a disability that requires some adjustment in their teaching or learning environment are encouraged to discuss their study needs with the Course Coordinator or the Equity Officer ( Early noti-fication is essential to enable any necessary adjustments to be made. In addition, it is important that all students are familiar with University policies and procedures in relation to such issues as: Examination procedures and advice concerning illness or misadventure; Occupational Health and Safety policies and student responsibilities. 8. CONTINUAL COURSE IMPROVEMENT Each year feedback is sought from students and other stakeholders about the courses offered in the School and continual improvements are made based on this feedback. UNSW's Course and Teaching Evaluation and Improvement (CATEI) Process ( is one of the ways in which student evaluative feedback is gathered. Significant changes to courses and programs within the School are communicated to subsequent cohorts of students. FINS5511 Corporate Finance Page- 10

11 9. COURSE SCHEDULE Lecture week Date Lecture Topics (Textbook reference) Lecturer Tutorial Activities: Questions (Q), Problems (P) e-workbook tutorial practice e-workbook assessment 1 1 Mar 07 Introduction to corporate finance (Ch.1 & 2) Lecturer: Dr. Wai-Man Raymond Liu No Questions or problems Introduction to Corporate Finance 2 8 Mar 07 Time value of money, valuing shares and bonds (Ch. 3 & 4) Lecturer: Dr. Wai-Man Raymond Liu Ch. 1: Q1, 2, 8-11,14-15 Ch. 2: Q2-4, P1, P2-3 Compound Interest & Annuities Scenario: Customised retirement packages Compound Interest & Annuities (2%) Share and bond valuation (2%) anytime b/w week Mar 07 NPV and other investment criteria, making capital investment decisions (Ch. 5) Lecturer: Dr. Wai-Man Raymond Liu Ch. 3: Q2, 6, 7, P5, 7, P8,15, P30-33,P36-37,P39-40,43 Ch. 4: Q2-5, P1, P2-4 In-class assessment (2%) Capital Budgeting Methods Capital Budget Methods (2%) anytime b/w week Mar 07 Project analysis and evaluation I (Ch. 6) Lecturer: Dr. Wai-Man Raymond Liu Ch. 5: Q1-3, 6-9, 12 P1, P2, P3, P4, 5, P7 In-class assessment (2%) Capital Budgeting Issues Scenario: Capital Budgeting Capital Budgeting Issues (2%) anytime b/w week Mar 07 Project analysis and evaluation II (Ch. 6) Lecturer: Dr. Wai-Man Raymond Liu Ch. 6: Q1-5, P1, 2, P3-5, P7, P8, P In-class assessment (2%) 6 6 Apr 07 Portfolio theory and asset pricing (Ch. 7) Lecturer: Dr. Wai-Man Raymond Liu Risk and return Risk and return (2%) anytime b/w week 6-7 (incl. Easter break) Easter Break 7 19 Apr Apr 07 Mid Session Examination (40%) (No lecture) Capital market efficiency (Ch. 17) Ch.7: Q1-11, P2-4, P7-9 FINS5511 Corporate Finance Page- 11

12 9 3 Mar Mar Mar Mar Mar Jun 07 Lecturer: Dr. Donghui Li Long-term financing: equity & debt (Ch. 10 & 11) Lecturer: Dr. Donghui Li Dividends and share repurchase decisions (Ch. 12) Lecturer: Dr. Donghui Li Principles of capital structure & capital structure decisions (Ch. 13 & 14) Lecturer: Dr. Donghui Li Cost of capital (Ch. 15) Lecturer: Dr. Donghui Li Analysis of takeovers (Ch. 20) Lecturer: Dr. Donghui Li Revision Lecturer: Dr. Donghui Li Ch.17: Q1-18 Ch.10: Q1-24, P1, P3-4; Additional Article Ch.12: Q1-19, P4-5 In-class assessment (2%) Dividend policy Ch.13: Q1-12, P2, P4-5; Ch.14: Q1-16 Ch.15: Q1-7, P1, P6, P17 In-class assessment (2%) Ch.20: Q1-20, P1, P4-5 (Problems in bold style are also essential and students must attempt them before the class. All other questions and problems should be attempted throughout the semester as a part of exam revision) FINS5511 Corporate Finance Page- 12

13 Diagrammatic outline of the course Lecture 1: Overview of corporate finance decisions and the underlying theory (Fisher s Separation Theorem) Lecture 2 5: Time value of money; Share, bond & project valuation Investment decision Lecture 6: Portfolio investment Lecture 7: Capital market efficiency Lecture 13: Analysis of takeover Lecture 9: Equity & debt financing Financing decision Lecture 11 12: Theory of capital structure & its application Dividend decision Lecture 10: Dividends & share repurchases Week 14: Review and Linking different concepts FINS5511 Corporate Finance Page- 13

14 Perdisco e-workbook: An online study resource has been developed for this unit to help you learn the content that will be covered this semester. Using hundreds of interactive practice questions and problem solving exercises, the e-workbook helps you make the most of your study time by offering: The chance to practice and revise each topic until you completely understand it Step-by-step feedback explaining why each answer you have given was correct or incorrect Help that s available when you need it (even outside of normal class hours) The e-workbook costs $34.10 for unlimited access throughout the semester and can be purchased online by credit card, money order, cheque or BPAY. Payment instructions are provided after registration. To start using the e-workbook, visit and click on Create a new account. e-workbook assessment tasks The e-workbook is also being used to deliver interactive assessment tasks that will contribute to your overall assessment marks for this unit. The assessments can be submitted online from anywhere, are marked instantly and give you immediate feedback on your performance. In the interest of student access and equity, a limited number of free library copies are provided in Electronic Special Reserve (ESR) for students who cannot afford to purchase the e-workbook to complete their online assessments. To access these, you must first create an account, add this unit s e-workbook to it and click on ESR login. For more information, click ESR info after registration. FINS5511 Corporate Finance Page- 14