INTD 0317 Introduction to Finance Section A: Monday, Wednesday 12.15-1.30 (AXN 103) Section B: Monday Wednesday 2.50-4.05 (Warner 208) PROFESSOR: Mike Schozer Prof Schozer Office: Farrell 206 Email: mschozer@middlebury.edu Office Hours (other by appointment or chance): Tuesday 10 am noon; 2-4 pm Wednesday 10am - noon Introduction to Finance is an introductory survey course discussing the role of finance in society, the basic workings of the financial system, how funds are allocated within the economy from those who save to those who invest or borrow, and how institutions raise money. The purpose of this course is to introduce you to the standard framework that finance professionals use for analyzing investment and financing decisions. Since the emphasis is on the fundamental concepts underlying modern finance, the approach will be analytical and rigorous, and some familiarity with accounting, mathematical, and statistical tools is necessary. We will cover a range of topics, including: (1) discounted cash flow (time value of money), (2) valuation of assets, (3) market efficiency, (4) corporate financing and optimal capital structure, (5) financial distress, (6) international markets, and (7) history of finance theory and the role of finance in a liberal arts education. I reserve the right to deviate from this syllabus, or assign additional material covered, and will give advance notice of any change. The volume of homework is significant, so plan your time accordingly. COURSE MATERIALS: We will be using a textbook (available in hard copy or as an ebook), the associated online homework program, Bloomberg Market Concepts, and an additional finance history book. All are required. Class slides and other materials are in the Handouts folder for the class. Page 1 of 9
TEXTBOOK: Fundamentals of Corporate Finance, Ross, Westerfield, Jordan, McGraw-Hill/Irwin, 11 th edition We will be using the related online homework program, Connect Finance, McGraw-Hill/Irwin. The unique Connect Finance website for this course are: Section A: http://connect.mheducation.com/class/m-schozer-intd-317-spring-2016-section-a Section B: http://connect.mheducation.com/class/m-schozer-intd-317-spring-2016-section-b You must go to this website and register to do the assigned homework (see below). There are several ways to get the textbook and access to the online homework system: New hardcover book: it comes bundled with an access code that you can use to register without an additional charge. DO NOT LOSE THE ACCESS CODE. Hard cover book with Connect Plus ISBN 9781259418952, which also provides full access to the ebook. Or looseleaf format with Connect Plus ISBN 9781259407727 (this will be in the bookstore). E book: e book with connect homework Connect Plus code card (for purchase in bookstore): ISBN 9781259289392. Also available through McGraw Hill website. There are variety of supplemental learning tools and materials online. If you buy the ebook standalone and want a hard copy book as well: o Generally, buying a current edition used text and then buying Connect Plus (which is required and which includes the ebook) separately is more costly than a new book. o If you buy an old edition of the hard copy text, you may be able to get that text and the ebook for less than the new text. You remain responsible for the material in the edition we are using in the course (edition 4) o If you purchase the ebook and want a hard copy, there is a loose-leaf version available. Additional Required Reading: Capital Ideas: The Improbable Origins of Modern Wall Street, Peter L Bernstein, Wiley, ISBN-13: 978-0471731740 Note: there is no homework or papers assigned related to this book, but you can expect one or more final exam essays drawn from it. CALCULATOR: You will want a calculator with financial functions such as the HP 12C, HP 10BII+, or TI BA II Plus. Page 2 of 9
BLOOMBERG MARKET CONCEPTS (BMC): We will be using BMC as part of the class. BMC can be accessed for free from the Bloomberg terminals in the library. There are four modules: Economics, Currencies, Fixed Income and Equities. BMC is a combination of video and questions, using the Bloomberg terminal for data and analysis. It is designed as for 6 total hours, more or less 1.5 hours / module. Bring headphones to the Bloomberg for the video component. With BMC, you will learn to use over 30 Bloomberg functions. The system also includes an exam component, which is part of your grade. There are only two Bloomberg terminals in the library, so plan your work accordingly and well in advance of the deadlines. You can work ahead on BMC, which is strongly suggested. In order to sign in (see instructions below), you will need to enter the following access codes: Section A: INTD0317A Section B: INTD0317B Use your Middlebury email as your login. There are no extensions on the BMC system (I cannot override the system), so get the work done in advance. If you miss the due date, you will still be able to access the system but your grade will be zero. STUDY RESOURCES: On Handouts are posted the following additional materials: cross reference guide from book to online homework problems answers to the concept questions and problems other than those assigned as homework at the end of each chapter. As study tools, you have access both to these resource plus, once the due date has passed, your can continue to access the homework problems online which will include the solutions. COURSE SCHEDULE: Lectures: presentation and/or discussion of material One mid term will be during a Thursday evening exam session. That week, there will be no Wednesday class. COURSE CONDUCT: The course will be presented in a combination of lectures, class discussion, and class problem solving. Bring paper, pencil and calculator to class. We will follow normal standards of professional and business conduct, which include the: Class starts on time. No late arrivals. Computers use is not permitted in class. Page 3 of 9
No phones or texting in class. These standards will be strictly adhered to. GRADING: Mid term exam 35% Final exam 35% Participation 5% Homework Connect online 20% BMC 5% Final Grade % >= % < A 93 100 A- 90 93 B+ 86 90 B 83 86 B- 80 83 C+ 76 90 C 73 76 C- 70 73 D 60 70 F 0 60 COURSE REQUIREMENTS: You are expected to prepare for each class. This means you must read the assigned material, and do the self-study review problem in each chapter. Preparation prior to class is also important to a worthwhile experience in this course. If you are falling behind or not understanding the material, it is your responsibility to come to office hours. ASSIGNMENTS: Chapter reading: Reading the chapters assigned before class is required. This includes the appendices where assigned. You should do the examples in the book as you read. The Self- Study Review Problem at the end of each chapter is an important review of that chapter. Homework Problems: The online homework is accessed through Connect Finance website described above. The access dates are set in the system so you must complete the work by 11.50 pm on the due date as required. There is no penalty for multiple attempts; the system will tell you whether your answer is correct. Each student has the same question with different numbers, and you are encouraged to work together. Solutions are available online the day after the due date. The questions are the same as the problems in the book (with different numbers) and a list of the book problems is in the course Handouts folder (the system renumbers the questions online). There will be no extensions for homework; the lowest Page 4 of 9
homework grade will be dropped. Bloomberg Market Concepts: This is independent work. At each login, you will be asked to certify adherence to the honor code. There are 4 sections, each of which has a quiz associated with it. The due dates are shown below. Access is described below. Capital Ideas: In addition to the textbook, you will also read Capital Ideas during the semester. It tells about the history of finance theory and how the practice of finance interacted with theoretical developments. Professor Colander will discuss this book in a lecture during the last week of class, but we encourage you to read the book early in the semester, since it provides context for some of the models you will be learning. EXAMINATIONS: Examinations may include both conceptual questions and numerical problems. The mid term and final are not cumulative. The final will include one or more essays drawn from Capital Ideas. ACADEMIC INTEGRITY: The College exists primarily to sustain the pursuit of knowledge. Scholarship, teaching and learning are possible only in an environment of academic integrity characterized by honesty and mutual trust. Simply expressed, academic integrity requires that one s work be one s own. Every member of the College community - students, faculty and administrators - has the responsibility to insure that the highest standards of academic integrity are maintained. STUDENTS WITH ACCOMDATION REQUIREMENTS Students with documented disabilities who need accommodation should contact Student Accessibility Services to ensure such accommodations are implemented in a timely manner. Please contact Jodi Litchfield at litchfie@middlebury.edu or 802-443-5936. Page 5 of 9
Notes: Connect homework assignments are designated below as HW BMC section due dates are noted as BMC Date Chapter Homework Homework Due Feb 15 Introduction to Corporate Finance (reading RWJ Chapter 1) BMC Economics Mar 2 Feb 17 Review: financial statements (reading RWJ Chapter 2) HW 2 Feb 28 Feb 22 Review: ratios (reading RWJ Chapter 3) HW 3 Mar 3 Feb 24 Long Term Financial Planning (reading RWJ Chapter 4) HW 4 Mar 6 Feb 29 Time value of money, PV and FV (reading RWJ Chapter 5 and section 6.1 of Chapter 6) HW 5 Mar 10 Mar 2 Time value of money, DCF (reading RWJ Chapter 6) Mar 7 Time value of money, DCF (reading RWJ Chapter 6) HW 6 Mar 17 Mar 9 Mar 14 International Corporate Finance (reading RWJ Chapter 21) International Corporate Finance (reading RWJ Chapter 21) BMC Currencies Mar 14 HW 21 Mar 24 Mar 16 Interest rates and bonds (reading RWJ Chapter 7) BMC Fixed Income Mar 24 Mar 21 Interest rates and bonds (reading RWJ Chapter 7) HW 7 Mar 31 Mar 23 Mar 24 Mar 28 Mar 30 No class Thursday evening mid term Break Break Apr 4 Stock valuation (reading RWJ Chapter 8) HW 8 Apr 14 Apr 6 Net present value and other investment criteria (reading RWJ Chapter 9) HW 9 Apr 17 Apr 11 Capital markets history (reading RWJ chapter 12) HW 12 Apr 21 Apr 13 Security market line (reading RWJ chapter 13) HW 13 Apr 24 Page 6 of 9
Apr 18 Cost of capital (reading RWJ chapter 14) HW 14 May 1 Apr 20 Cost of capital (reading RWJ chapter 14) Apr 25 Raising capital (reading RWJ chapter 15) BMC equities HW 15 May 11 May 5 Apr 27 Financial leverage (reading RWJ chapter 16) HW 16 May 8 May 2 Financial leverage (reading RWJ chapter 16) May 4 Dividend policy (reading RWJ chapter 17) HW 17 May 15 May 9 May 11 May 19-24 Prof Colander lecture: The History and Future of Finance Prof Colander lecture: Finance and the Liberal Arts final exams Page 7 of 9
Note: we are using the Bloomberg terminal only, not the web version Page 8 of 9
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