COURSE OUTLINE Semester One, 2015
Contents Paper Description and Aims... 1 Learning Outcomes... 1 Teaching Staff... 1 Course Delivery... 3 Expectations and Workload... 4 Course Learning Resources... 4 Textbook... 4 Blackboard... 4 Student Webmail... 5 Assessment... 5 Quality Assurance... 7 Learning Outcomes... 8 Grading System... 8 Dishonest Practice and Plagiarism... 8 Course Calendar... 10 Student Learning Support and Information... 11 Student Charter... 11 Guidelines for Learning at Otago... 11 Student Learning Centre... 11 Library Support... 11 Kaiārahi Māori Māori Student Support... 12 Pacific Islands Student Academic Advisor... 12 Disability Information and Support... 12 Student Feedback... 12 Class Representatives... 12 Concerns about the Course... 13 Disclaimer... 13
Paper Description and Aims This course introduces students to business finance with a primary devotion to the principles of financial valuations. We will first discuss the concept of time value of money in extensive mathematical detail together with looking at how we can apply these valuation techniques to real world examples. We then apply these principles to valuing business projects and financial securities (stocks and bonds). Since decision-making with investments virtually always involves risk and uncertainty, we will then introduce the concept of risk, and the relation between risk and return. This is followed by a discussion of the relation between cost of financing and weighted average cost of capital. We will then integrate our knowledge of cash flows with our understanding of risk and financing cost to take a decision from a valuation outcome. We close the course looking at the relevance of capital structure and dividend policy in corporate performance. Learning Outcomes Upon successful completion of this paper, you should be able to understand the business environment through the different forms of business that exist, understand and solve problems related to the time value of money, give rough estimates of the values of shares and bonds, have an understanding of ethical issues associated with the handling of money, critically analyze investment decisions, apply risk and return models to businesses in practice, and understand how financial decision making contributes to business knowledge. Page 1
Teaching Staff Paper Coordinator Name: Christine Smith-Han Office: CO5.45 Email: christine.smith-han@otago.ac.nz Office Hours: Tue: 10:00am to 12:00pm Lecturer Name: Office: Email: Office Hours: Senior Tutor Name: Office: Email: Office Hours: Dr. Eric Tan CO5.13 eric.tan@otago.ac.nz TBC Dr. Olena Onishchenko CO5.45 olena.onishchenko@otago.ac.nz Mon: 11:00am to 1:00pm Contacting Staff: Content, Blackboard or extenuating circumstances: If you have questions about the material you should; (1) Discuss it with tutors (2) See the relevant lecturer during office hours or talk to them just after lectures. (3) Email olena.onischenko@otago.ac.nz For matters relating to extenuating circumstances please email Christine Smith-Han. Emails are cleared during work hours only and you should anticipate an acknowledgement or response no later than 48 hours from your first email query. Page 2
Course Delivery Every week students must attend three 50 minute lectures and one 50 minute tutorial each week Lectures Lectures present the key conceptual material through discussion and interaction between teaching staff and students. Lectures are supported by readings. Lecture times and locations are; Monday 10:00 10:50 AUDITORIUM Thursday 10:00 10:50 AUDITORIUM Friday 10:00 10:50 AUDITORIUM Tutorials Tutorials are interactive, collaborative sessions in which students attempt to cement concepts presented at lectures with their peers in a supportive environment. Tutorials offer you the opportunity to work in groups on a series of tasks designed to apply the concepts that you have been exposed to in class and from your reading, and to stimulate your interest in the course as it applies to everyday issues. The key feature of tutorials, as opposed to lectures and individual study, is participation of all members of the tutorial group. Please prepare for tutorials before going to them. Tutorials begin in the second week of semester. You will be allocated a tutorial session and this information will be available under Student Portal in e-vision. If you require a tutorial stream change due to clashes or late enrollment after formal Course Approval, you can do this in the first two weeks of the semester. The last date for tutorial stream changes is Friday 06 March 2015. Please see Gail Maxwell (CO 5.51) or Margaret Grundy (CO 5.01) Accountancy & Finance Department between 10.00 to 11.00am or 2.00 to 3.00pm on week days. Course Calendar The course calendar (See below) details scheduling information. Note that this calendar may change as the course proceeds. Any changes will be announced at lectures and be detailed on Blackboard. Students are expected to prepare for and attend all classes to gain full benefit from the course These activities should be prepared for by reviewing information detailed on Blackboard and completing any assigned readings. Students unable to attend a lecture are expected to catch up on missed material. Unless stated otherwise, all aspects of the course are examinable. Page 3
Expectations and Workload The following note is copied from the University of Otago website: http://www.otago.ac.nz/study/planning/workload.html A full-time first year course is generally between 54-72 points in any one semester or 108-144 points in any one year. As an approximate guide, you can expect to spend about two hours per week per 3 points for single-semester papers. These hours are made up of a combination of lectures, tutorials, laboratories, assignments and reading. Thus, for an 18-point paper (like BSNS 108), you can budget 12 hours per week on average. That is eight hours of study outside the classroom per week (the less you do, the less likely it is that you pass). Some topics may require more study; some may require less. We estimate that each lecture you fail to attend reduces your maximum possible score on the final exam by maybe 4%, and each lecture you fail to attend in the first five weeks reduces your maximum possible score on the midterm exam by maybe 6%. So, come to class and take handwritten notes. If you miss a lecture, you are advised to get the lecture notes from another student in the class. Course Learning Resources Textbook Essentials of Corporate Finance 3 rd Edition, by Stephen Ross, Rowan Trayler, Ron Bird, Randolph Westerfield, Bradford Jordan, ISBN: 9780071013185 (2013) The textbook is required. Tutorial problems come from the third edition of the text. Either of the first or second edition (ISBN 007028497 [2011] or ISBN 0074716700 [2008]) are just fine for studying for the course, but the tutorial problems covered by tutors come from the third edition. We will post electronic copies of these on Blackboard. You should read the relevant chapter(s) before you come to class. This will greatly improve your understanding. Blackboard Blackboard https://blackboard.otago.ac.nz/ provides you with access to course materials, class notices, and additional study resources. Blackboard is used to email the whole class so it is important that you check your student email and Blackboard regularly. Page 4
Student Webmail IMPORTANT - DO THIS NOW: Forward your University email address to an email address that you use regularly as follows: 1. Log into your StudentMail account using your student username and password. 2. Click Options >See All Options, 3. Under Account, select either the Forward your email shortcut or the Connected Accounts tab. 4. At the bottom of the screen, type in the email address you want your email to be forwarded to. You can also choose to have a copy of these emails kept on your StudentMail account, so please check the box if you would like this. 5. Click the Start forwarding link at the bottom of the page. Assessment All materials presented are examinable (except where stated otherwise). As noted in the table below, there are four quizzes, one midterm exam, and one final exam. Type Week Weight Quiz 1 (out of 10 points) Week 3 2.5%* Quiz 2 (out of 10 points) Week 6 2.5%* Midterm Exam Week 7 35.0% Quiz 3 (out of 10 points) Week 9 2.5%* Quiz 4 (out of 10 points) Week 12 2.5%* Final Exam Exam Period 55.0% Total 100.0% * Quizzes account for 10% of the overall grade; calculated from your best three out of four quiz results 1. Quizzes Quizzes are held in four of the 13 weeks (see the class schedule for dates and topics). Use a compatible browser: (see https://blackboard.otago.ac.nz/ for advice). Each quiz is accessed online using BlackBoard between 12 Noon Wednesday of the relevant week and 5pm Tuesday of the following week. There is a practice quiz available for access from Monday 8am to the following Tuesday 5pm that goes with the actual quiz on the relevant week the actual quiz is scheduled to run. Quizzes appear under the Assessments tab on BlackBoard. Each actual quiz lasts 40 minutes (but you can finish early) and you get only one attempt. 1 Formula= (1/3)*[(Q1+Q2+Q3+Q4)-min(Q1,Q2,Q3,Q4)]*(10%) Page 5
Do not leave it until the last minute! The quiz link disappears after 5pm Tuesday of the following week. Note that BlackBoard (or your computer) can sometimes experience technical difficulties or hang-ups that require the instructor to reboot your quiz login and enable you to re-sit the quiz. Email olena.onischenko@otago.ac.nz to request for a reboot if you find yourself in this situation. To reduce the chance of technical difficulties, make sure you are freshly logged in, use a compatible browser (as indicated at the BlackBoard login page), don't click the back button on your browser, and complete the quiz within the time limit by clicking on save and submit before the 40 minutes are up. Although the quiz is live from Wednesday Noon to 5pm in the following Tuesday week, we will not action on requests to reboot your quiz if you choose to sit the quiz on aftermidday Tuesday. So, aim to sit the quiz ahead of Tuesday when the quiz is scheduled to finish, and recognize that if you leave to sitting the quiz on the last day after Tuesday 12pm, and if the system hangs up on you, you will not get a second chance. Be sure to have your formula sheet, course materials and class notes with you when you take the online quizzes. Your quiz answers must be your own work; you are not allowed to receive any help from another person in answering quiz questions (that would be cheating and a clear violation of the University Ethical Policy Guidelines). Midterm (tentative Wednesday 7 to 9pm, 15 April 2015) The midterm exam is a closed book two-hour multi-choice exam held outside regular class time. If your final score is higher than your midterm results, then you will be granted plussage. This means that the numerical grade on your final exam will replace the numerical grade on your midterm exam. If you are ill for the final exam, and you apply to the Examinations Office for special consideration, we may look to your midterm exam to help choose your grade. So, the bottom line is that you should aim to do as well as possible on the midterm exam. ****There is a TERMS REQUIREMENT for BSNS 108: you must score 30% or higher on the midterm exam. If you fail terms then you cannot sit the final exam and you fail the course. **** Note: Your BSNS108 midterm grade will be released on Blackboard ideally no later than one week after the date of the midterm exam. If you were impaired (mentally, physically or emotionally) for the midterm test, then before your grades get released you must present a medical certificate properly dated to cover the day of the exam. In line with university policy on special consideration, no student will be granted special consideration (e.g., a terms waiver) if they submit a medical certificate after the release of their mid semester grades. Page 6
Final grade Assuming that you pass terms and sit the final exam, we have to assess whether you pass the course or not. To pass BSNS 108 you must score 30% or higher on the midterm; AND score an average 50% or higher when we calculate your overall weighted score including your quizzes in accordance with the Assessment table. All material presented is examinable (unless stated otherwise) by quizzes, the midterm and the final examination. All important assessment information such as due dates and times, content, guidelines and so on will be discussed in lectures and, where appropriate, detailed on Blackboard in the week prior to each assessment. Students are responsible for ensuring that they are aware of this information, keeping track of their own progress, and catching up on any missed classes. Note two University final examination rules students often claim to not know about (http://www.otago.ac.nz/study/exams/otago029434.html): If you are impaired (mentally, physically, emotionally) for your final exam, then an application for special consideration must be received by the Chief Supervisor of Examinations within five calendar days of the candidate's last examination for which Special Consideration is being requested. No candidate shall communicate with an examiner in regard to an examination either in the examination script or otherwise before the release of confirmed results, except through the Manager, Student Administration. So, you must not write finalist (or any other message) on your exam script, or send an email to your instructor before your results are released. Quality Assurance At the Otago Business School we monitor the quality of student learning and your learning experience. Your assessed work may be used for assurance of learning processes, such as evaluating the level of achievement of learning outcomes, with the aim of improving the quality of our programmes. All material used for quality assurance purposes will be treated as confidential and the outcome will not affect your grades. Page 7
Total Final Exam Midterm Exam Quiz 4 Quiz 3 Quiz 2 Quiz 1 BSNS108 Business Finance Learning Outcomes Learning Outcome (subject to change) Understand the business environment through the different forms of business. Understand and solve problems related to the time value of money. Calculate the price of shares and bonds. Gain an understanding of the ethical issues associated with the handling of money. Critically analyze business investment decisions. Apply risk and return models to businesses in practice Understand how financial decision making contributes to business knowledge. Total 2.5%* 2.5%* 2.5%* 2.5%* 35% 55% 100% * Quizzes account for 10% of the overall grade; calculated from your best three out of four quiz results 2. Grading System The grading scheme used at Otago is: A+ 90-100 C+ 60-64 A 85-89 C 55-59 A- 80-84 C- 50-54 B+ 75-79 D 40-49 B 70-74 E <40 B- 65-69 Dishonest Practice and Plagiarism Students should ensure that all submitted work is their own. Plagiarism is a form of dishonest practice (cheating). It is defined as copying or paraphrasing another s work and presenting it as one s own. Any student found responsible for dishonest practice in any piece of work submitted for 2 Formula= (1/3)*[(Q1+Q2+Q3+Q4)-min(Q1,Q2,Q3,Q4)]*(10%) Page 8
assessment shall be subject to the University s dishonest practice regulations, which may result in serious penalties, including forfeiture of marks for the piece of work submitted, a zero grade for the paper, or in extreme cases, exclusion from the University. The University of Otago reserves the right to use plagiarism detection tools. Students are advised to inform themselves about University policies concerning dishonest practice and take up opportunities to improve their academic and information literacy. If necessary, seek advice from academic staff, or the Student Learning Centre. The guideline for students is available at this link: http://www.otago.ac.nz/study/plagiarism/ The Library resource on ethical use of information is available via this link: http://oil.otago.ac.nz/oil/module8.html Page 9
Course Calendar All information in this draft is subject to change. Week Date Topic Chapters Tutorial Assessment 1 23/02/2015 Intro to Finance 26/02/2015 Forms of Business 27/02/2015 Corporations and Financial Markets 1 None No 2 2/03/2015 Time Value of Money (TVM) 1: Intro + 5/03/2015 4 Single Cash Flow TVM 1 6/03/2015 No 3 9/03/2015 QUIZ 1 12/03/2015 Time Value of Money (TVM) 2: TVM 1 INTRO & 5 13/03/2015 Multiple Cash Flows TVM 1 4 16/03/2015 19/03/2015 20/03/2015 Bonds and Interest Rates 6 TVM 2 No 5 23/03/2015 26/03/2015 27/03/2015 Shares and Equity Valuation 7 Bonds No 6 30/03/2015 QUIZ 2 2/04/2015 Business Ethics Equities TVM 2 & No 3/04/2015 No lecture (Good Friday) Bonds 6/04/2015 7 8 9 10 11 12 13 Midsemester Break 9/04/2015 10/04/2015 13/04/2015 Capital Budgeting: 16/04/2015 Decision Criteria 17/04/2015 8 None 20/04/2015 From Financial Statements to Cash Decision 23/04/2015 9 Flow (CF) Estimation Criteria 24/04/2015 27/04/2015 Cash Flow 30/04/2015 Investment Market History 10 Estimation 1/05/2015 No No 4/05/2015 Investment 7/05/2015 Market Risk & Return 11 8/05/2015 History 11/05/2015 Risk & 14/05/2015 No Midterm Test Wed, 15 April (TBC) QUIZ 3 Decision Criteria/ CF Estimation 15/05/2015 Cost of Capital 12 Return 18/05/2015 CAPM, QUIZ 4 21/05/2015 Capital Structure & Dividend Policy 13, 14 Cost of History, Risk 22/05/2015 Capital & Return 25/05/2015 28/05/2015 Review Review 29/05/2015 Page 10
Student Learning Support and Information Student Charter http://www.otago.ac.nz/about/otago005275.html Guidelines for Learning at Otago http://hedc.otago.ac.nz/hedc/wp-content/uploads/2012/12/guidelines-for-learning.pdf http://hedc.otago.ac.nz/hedc/learning/ Student Learning Centre The Student Learning Centre, which is part of the Higher Education Development Centre, provides learning support, free of charge, to ALL enrolled students. Their services include: a workshop programme designed to help students to improve their learning strategies and their generic skills; individual assistance with learning issues; on-line study skills advice; a student leadership programme a student-led peer support programme for students of all ages and backgrounds. conversational English groups for students from a non-english speaking background The Centre also provides two very helpful study guides, Guidelines for Writing and Editing and Writing University Assignments and these are available on the SLC website. http://hedc.otago.ac.nz/hedc/learning/ Library Support The University Library provides online resources for students. These include subject guides, and other research resources, and citation styles. Check it out at: http://www.otago.ac.nz/library/for/undergraduates/index.html The Library website http://www.library.otago.ac.nz/index.php provides online access to resources and services, including the catalogue, group room bookings, library hours and locations, past exam papers, subjects guides and more. From your mobile: http://m.otago.ac.nz/library/ Page 11
Kaiārahi Māori Māori Student Support Corey Bragg Tel +64 3 479 5432 Email corey.bragg@otago.ac.nz Pacific Islands Student Academic Advisor Warm Pacific Greetings Talofa lava, my name is Esmay Eteuati and my role is to liaise with Academic Departments and Student Services relating to Pacific students and their course of study. I support both staff and students in the Business School and have a network of Pacific contacts in other Divisions around the University. Tel +64 3 479 4756 Email: esmay.eteuati@otago.ac.nz Disability Information and Support Students are encouraged to seek support if they are having difficulty with their studies due to disability, temporary or permanent impairment, injury or chronic illness. It is important to seek help early, through one of the contacts below: Name Office Email Disability Information and Support 262 Leith St disabilities@otago.ac.nz Mr. Dyna Seng 547 Commerce dyna.seng@otago.ac.nz Student Feedback We encourage your feedback. This can be in the form of contacting staff, participating in course evaluation surveys and communicating with class representatives. Continual improvements will be made to this course based in part on student feedback. Recent changes to this course as a result of constructive feedback include (insert summary of improvements) Class Representatives The class (or student) representative system is an avenue for encouraging communication and consultation between staff and students. It provides you with a vehicle for communicating your views on the teaching and delivery of the paper and provides staff with an opportunity to communicate information and gain constructive feedback from students. It contributes to the development of a sense of community within a department and it adds a further dimension to the range of support services offered to students. Volunteers for the role of class representatives will be called early in the semester. The OUSA invites all class representatives to a training session, conducted by OUSA, about what it means to be a class representative and some of the possible procedures for dealing with issues that arise. They also provide information on the services that OUSA offers and the role OUSA can play in Page 12
solving problems that may occur. The OUSA provides support to class representatives during the semester. Departmental staff will also meet with class representatives during the semester to discuss general issues or matters they wish to have considered. Your class representative s name and contact details will be posted on Blackboard early in the semester. Concerns about the Course We hope you will feel comfortable coming to talk to us if you have a concern about the course. The Course Co-ordinator will be happy to discuss any concerns you may have. Alternatively, you can report your concerns to the Class Representative who will follow up with departmental staff. If, after making approaches via these channels, you do not feel that your concerns have been addressed, there are University channels that may aid resolution. For further advice or more information on these, contact the departmental administrator or head of department. Disclaimer While every effort is made to ensure that the information contained in this document is accurate, it is subject to change. Changes will be notified in class and via Blackboard. Students are encouraged to check Blackboard regularly. It is the student s responsibility to be informed. Page 13