University of Alberta School of Business Department of Finance and Statistical Analysis FIN 301 Introduction to Finance Winter 2014 1. Lectures and Seminars/Labs Lectures Instructor Lukas Roth Office BUS 2-32E Phone 780-492-4431 E-mail fin301@ualberta.ca Office Hours Tuesday, 1:30-2:30pm, Thursday, 1:30-2:30pm Lectures Tuesday, Thursday 3:30-4:50pm, CCIS 1-430 Seminars/Labs Instructor Andras Marosi Mengxin Zhao Andras Marosi Office BUS 2-32F BUS 2-32D BUS 2-32F Phone 780-492-5365 780-248-1318 780-492-5365 E-mail fin301@ualberta.ca fin301@ualberta.ca fin301@ualberta.ca Seminars Monday Wednesday Friday J1, 1:00-1:50pm, BUS 2-5 J3, 1:00-1:50pm, BUS 2-5 J5, 1:00-1:50pm, TB 95 J2, 2:00-2:50pm, BUS 1-5 J4, 2:00-2:50pm, BUS 1-5 J6, 2:00-2:50pm, BUS 1-5 2. Course Objective This course is intended to provide a market-oriented framework for analyzing the major types of financial decisions made by corporations. Lectures, readings, and assignments will provide an introduction to discounted cash flow techniques, financial asset valuation, capital budgeting principles and problems, enhance your understanding of dividend policy, capital structure and related corporate finance issues, and introduce you to derivative securities. This course provides the basis for all other classes in Finance as well as the basic tools each business student needs to be successful in her/his career. In addition, regardless of a student s chosen field of study, this course will provide basic tools to make personal financial decisions. 3. Textbook Fundamentals of Corporate Finance, 8th (or 7th) Canadian Edition; Ross, Westerfield, Jordan, and Roberts, 2013 (2010), McGraw-Hill Ryerson, Toronto. 4. Office Hours, E-mails, Discussion Board, and Announcements Office hours are as stated above and by appointment. In most cases I will also be available to answer questions after class (wait for me outside the class room if you have questions). We are also available by e-mail. Under normal circumstances, e-mail questions will be answered within 48 hours. Answers to e-mail questions will be either a posting to the Discussion Board section on Ulearn or a direct response to the sender. Be sure that you check the Discussion Board before you e-mail your questions to an instructor. You will not receive personal attention for questions that have their answers available on the Discussion Board. Your e- mail must be sent to fin301@ualberta.ca and must be addressed to a specific instructor in the subject line (e.g., SUBJECT: Roth - Assignment 1, Question #3). E-mails not addressed to a specific instructor will not be read.
In addition, due to internet security considerations, we will only read e-mail originating from your University e-mail account. Any e-mail from non-university accounts will not be read. On business days (Monday to Friday) we have 48 hours to answer your questions but we will try to answer as fast as we can. We may need more than 48 hours on weekends. In most cases, we answer all questions in the order they were received. As a minor courtesy, please include your name in all your e-mails. Exchanging e-mails with usernames like skg103 or qqq41 is simply less rewarding than writing an answer to Jack or Jill, or whatever your name may be. Important announcements (about exams, assignments, etc.) will be posted on Ulearn and may also be sent to each student s university e-mail address. Students are expected to check Ulearn and their username@ualberta.ca e-mail account regularly for new announcements. 5. Grading and Exams Course grades will be determined by combining points on homework assignments, a midterm exam, and a final exam. If you miss the midterm exam, I require supporting documentation pertaining to the absence within two working days following the missed midterm exam (or as soon as possible with regard to the circumstances underlying the absence). If you can provide supporting documentation, the weight of the midterm will be applied to your final exam. If you do not have supporting documentation, you will receive a zero on the exam. If you feel that your grade is incorrect, you must notify me in writing during the one-week period following the return of the midterm. After that, the problem will not be researched. Please note that a request to have a question on your midterm re-graded entails a request to have the entire exam re-graded. If an exam was written in pencil, appeals where the answer could have been changed will not be accepted. Deferred final examinations will be allowed for students following University procedures for obtaining deferrals. Students interested in a deferred final exam should consult the Undergraduate Office. For more information see here, or consult Section 23.5.6 of the University Regulations and Information for Students in the University Calendar. In the event that a deferred final exam is granted, the deferred final exam will be given at 9:00am on Monday, May 26, 2014. The weights given to assignments and exams are: Assignments Weights (% of Total Grade) Homework 16% (4% each) Midterm exam 38% Final exam 46% Total 100% Each assignment is due on the date indicated in this syllabus. Homework is to be submitted via the course website. The cut-off time for assignment submission on the due date is 4:00pm. The web page will not accept submissions after 4:00pm. If you fail to submit a homework assignment on time, you will receive a grade of zero for that assignment unless you provide supporting documentation of the reason for failing to hand in the homework. With supporting documentation, the weight of the missed homework will be evenly distributed among future homework assignments. For example, if you missed homework #2 and have a valid reason for not doing so, then 1/2 of the weight of Homework #2 will be applied to homework #3, and 1/2 to Homework #4. If you miss Homework #4, the weight will be transferred to the final exam. You cannot hope to absorb the material by cramming the week before the exam! While the final will focus on the material covered following the midterm, Finance is a cumulative discipline: students with a poor understanding of the pre-midterm material are unlikely to do well on the final. All assigned sections of the text should be read. You cannot assume that all the material needed for the exams will be covered in class. Homework, midterm, and final exam represent the only marks available to students. Extra work to improve your grade is not offered. 2
Final grades are based on the total points accumulated through the semester (points will be weighted according to the table above). Students acquiring 95% or more of the total points available will receive a grade of A+. Students acquiring at least 90% of the total points available will receive a grade of A. Please note that depending on the overall performance of the class, an A can be obtained with fewer than 90% of the total points. Students accumulating fewer than 50% of the total points available will receive a grade of F. Students accumulating 50% or more of the total points available will not receive a grade below D. Grades for students accumulating between 90% and 50% of the points will be based on the overall performance of the class. The following table may be helpful: Accumulated Points Final Grade 95% or more Guaranteed A+ At least 90% Guaranteed A 50%-89% Depending on class performance (A-D) Less than 50% Fail (F) The University provides a translation between the letter grades and the numeric equivalents used for calculating GPA s on this web page. 6. Exam Procedures You should bring your picture ID, your calculator, and writing implements to all examinations. No red or green pens are allowed, and students writing the exam in pencil may be unable to contest the accuracy of their mark. Be sure to bring your own calculator and be sure that the batteries have sufficient power. For the midterm exam, students will be allowed to use one 8½ 11 inch cheat sheet and can use both sides of the sheet. For the final, students will be allowed to use two 8½ 11 inch cheat sheets (again, you can use both sides). There are no restrictions on what students can put on these sheets but they must be in own handwriting or in standard font (i.e., Times New Roman, Arial) and standard font size (i.e., at least 10pt). 7. Calculator, End-of-chapter Problems, and General Information Your calculator is a tool and cannot substitute for an understanding of the problem solving process. As far as use of your calculator is concerned, I suggest you consult the user s manual. Additional help is available under Resources on the course website for students who own a Texas Instruments BA II PLUS financial calculator. Instructors will not be spending time (in class or in office hours) explaining the use of the Texas Instruments BA II PLUS. This (or any other financial calculator) is not a required tool for this class; students should be able to answer all homework and exam questions without a financial calculator. Remember that using a financial calculator during the exams involves a trade-off: students who use financial calculators tend to solve problems faster, but they also tend to show their calculations in less detail and end up receiving fewer points in partial credit when they make a mistake. I have designated some end-of-chapter problems that I think reflect important aspects of the material. These problems are not graded or collected. In the past, some students have found it useful to work on these problems as we cover the corresponding topics in class. Others felt that they spent valuable time on end-of-chapter problems at the expense of the material covered in class. In other words: how much, if any, time you should spend on solving the end-of-chapter problems will depend on how helpful you find them in helping you understand the material covered in class. Answers to some of the problems are in the back of the text and the answer key for all of the problems is posted on the course web site. Missed classes are solely your responsibility. If you want to know what was covered in a class that you missed (including announcements), you will have to find a classmate who attended class and is willing to share her/his notes. I have doubts about any student s ability to pass this course if she/he fails to attend class. Regular class attendance is expected. Recording is permitted only with the prior written consent of the professor or if recording is part of an approved accommodation plan. If an instructor (or Specialized Support and Disability Services) grants permission, the recording is solely for the personal use of the student to enhance their understanding of the lecture material. 3
8. Academic Integrity I expect honesty and integrity from my students. Cheating of any sort will be dealt with as sternly as University policy allows. All exams and homework assignments are individual works. To help you judge what we consider acceptable and non-acceptable collaboration on individual assignments, consider the following examples of DOs and DON Ts: DOs Discuss the course material with other students Ask classmates for help when you are stumped Offer help to other students Do your own work Participate in study groups Participate on the discussion board (but do not disclose full or partial solutions to individual assignments; however, giving hints, explanations, and clarifications is acceptable, of course) DON Ts View or copy someone else s full or partial homework solutions Allow someone else to view or copy your full or partial homework solutions Exchange full or partial homework solutions (e.g., via e-mail, Facebook groups, other social networks, etc.) Communicate with anyone other than the course officials during the exams Gain access to course materials from prior semesters that have not been provided to all students by the instructor. This may include exams, assignments, and problem solutions 9. Seminar Schedule Below is the schedule for the seminars. Please note there are no seminars and office hours scheduled on the following days: Jan 6 and 8; Feb 7, 10, 12, and 14; Apr 7 and 9. We may use some of these dates for special office hours to help students prepare for the midterm and the final exam. Seminar Topics Sections and Dates Monday (J1, J2) Wednesday (J3, J4) Friday (J5, J6) 1 Time Value of Money I Jan 13 Jan 15 Jan 10 2 Time Value of Money II Jan 20 Jan 22 Jan 17 3 Bond Valuation and Duration Jan 27 Jan 29 Jan 24 4 Equity Valuation Feb 3 Feb 5 Jan 31 5 Capital Budgeting I Feb 24 Feb 26 Feb 28 6 Capital Budgeting II Mar 3 Mar 5 Mar 7 7 Risk and Return Mar 10 Mar 12 Mar 14 8 Options Mar 17 Mar 19 Mar 21 9 Cost of Capital Mar 24 Mar 26 Mar 28 10 Capital Structure Mar 31 Apr 2 Apr 4 4
10. Tentative Course Outline Below is a schedule to guide you in your readings and class preparation. However, since some topics may take more or less time than planned, we may deviate slightly from this schedule. The schedule needs to be somewhat flexible. That said, homework due dates and the midterm date are not flexible. I will not allow individual students to take the midterm at an earlier or later date and the same applies to homework deadlines. If I need to extend a homework deadline due to unforeseen circumstances, I will extend it for the entire class. All chapters and problem numbers refer to the 8th Edition of the textbook. For the most part, the problem numbers of the 8th and 7th Edition are identical. If they differ, you find in brackets the equivalent problem number of the 7th Edition. For example, CRQ 2.1 (CRQ 1 in Chapter 2) in the 8th Edition is also CRQ 2.1 in the 7th Edition; but Q&P 2.29 in the 8th Edition is Q&P 2.30 in the 7th Edition. Date Topics Covered Readings Recommended Problems 1 Special Events Jan 7 Introduction and Ch. 1, 2, 3 Ch. 1, 1.1-1.6, Ch. 2 (all), Ch. 3.1 CRQ: 1.1, 1.2, 1.3, 1.13, 2.1, 2.3, 3.1 Q&P: 2.29 [in 7th Edition: 2.30], 2.34 [2.35] Jan 9 Ch. 5 Ch. 5 (all) Q&P: 5.1-5.6, 5.9, 5.14, 5.17, 5.20 Jan 14 Ch. 5, 6 Ch. 6.1-6.2 Q&P: 6.2, 6.5, 6.15, 6.16, 6.23, 6.25, 6.27, 6.40 Jan 16 Ch. 6 Ch. 6.3-6.4 Q&P: 6.50, 6.56, 6.63, 6.72 [6.74], 6.73 [6.75], 6.76 [6.78] Jan 21 Ch. 7 Ch. 7 (skip 7.7) Q&P: 7.1, 7.3, 7.8-7.11, 7.24, 7.26a, 7.26b Jan 23 Ch. 7 Appendix 7A Q&P: 7A.3 Jan 29 Homework 1 due Jan 28 Ch. 8 Ch. 8 (all) Q&P: 8.4. 8.9, 8.15, 8.16, 8.21, 8.23 Jan 30 Ch. 8 Ch. 8 (all) Feb 4 Ch. 9 Ch. 9 (all) Q&P: 9.7, 9.8, 9.12, 9.13, 9.15, 9.17, 9.18 Feb 6 Ch. 9, 10 Ch. 10 (all) Q&P: 10.7-10.10, 10.21, 10.27, 10.28, 10.36, 10.46 Feb 10 Homework 2 due Feb 11 Review Up to and including Ch. 8 Midterm Review Feb 13 Midterm Up to and including Ch. 8 Midterm Feb 17-21 Reading week Reading week Feb 25 Ch. 10 Feb 27 Ch. 10, 11 Ch. 11.1-11.2, 11.6-11.7 Mar 4 Ch. 12 Ch. 12 (all) Q&P: 12.1-12.3, 12.4, 12.9-12.11, 12.15, 12.16 Mar 6 Ch. 13 Ch. 13 (all) Q&P: 13.1, 13.4, 13.7, 13.10, 13.15, 13.23, 13.24 Mar 11 Ch. 24.6, 25 Ch. 24.6, Ch. 25.1 CRQ: 24.2, 24.7 Q&P: 24.4 Mar 13 Ch. 24.6, 25 Ch. 25.2, 25.3, 25.5, 25.9, Appendix 25A CRQ: 25.2, 25.5, 25.6, 25.7, 25.10 Q&P: 25.2-25.4, 25.6, 25.8, 25A.1 Mar 18 Ch. 25, 14 Ch. 14.1-14.5, 14.7 Q&P: 14.1, 14.4, 14.7, 14.9, 14.16, 14.17 Mar 19 Homework 3 due 1 CRQ refers to the Concept Review Questions and Q&P to the Questions and Problems at the end of the textbook. 5
Date Topics Covered Readings Problems Special Events Mar 20 Ch. 14 Ch. 14.1-14.5, 14.7 Mar 25 Ch. 16 Ch. 16 (all) Q&P: 16.1, 16.4, 16.8, 16.16, 16.17, 16.23 Mar 27 Ch. 16 Ch. 16 (all) Apr 1 Ch. 16, 17 Ch. 16 (all), 17 (all) Apr 3 Ch. 17 Ch. 17 (all) Q&P: 17.4, 17.7, 17.12, 17.14, 17.15 Apr 8 Review Final Exam Review Apr 9 Homework 4 due Apr 23 Final (tentative) Final 6