FIN 301-A1 - Introduction to Finance
Department of Finance
Spring 2022 (10 May 2021 – 14 June 2022)
Arkadiy Lenchak
1) Lectures/Seminars
Class Class Time/Venue Instructor Office Hours Lectures Tues/Thurs 9:00-11:50am
BUS 2-05
Arkadiy Lenchak Tues: 2:00 to 4:00 pm room BUS 2-33
Seminars Pre-recorded videos Wenjie Chen Thurs: 4:00 to 6:00 pm online by Zoom
Office hours are as listed above and by appointment. The instructor will also often be available to answer questions immediately after the lectures.
E-mail address for all queries: [email protected] Each e-mail should have a subject line that is directed to a particular instructor and purpose. We aim to respond within 48 hours on business days.
2) Course objective
This course provides a market-oriented framework for analyzing the major types of financial decisions made by corporations. Lectures, readings, and assignments cover topics related to discounted cash flow techniques, financial asset valuation, capital budgeting principles, capital structure and related corporate finance issues, and derivative securities. This course provides the basis for all other classes in finance as well as the basic financial tools for students in business, engineering, and sciences to be successful in their corporate careers. In addition, this course covers basic tools for personal financial decision-making.
3) Textbook
Fundamentals of Corporate Finance, Third Canadian Edition; Berk, DeMarzo, Harford, Stangeland, and Marosi, Pearson Canada, 2019. (Note, you can also use the Second Canadian Edition, 2016.) This textbook is available from the university Bookstore or online from Pearson and there are copies in the Library on reserve. Class materials such as lecture slides and solutions to the recommended end-of- chapter solutions will be placed on eClass.
4) General information
Audio or video recording, digital or otherwise, of lectures, seminars or any other teaching environment by students is allowed only with the prior written consent of the instructor or as a part of an approved accommodation plan. Student or instructor content, digital or otherwise, created and/or used within the context of the course is to be used solely for personal study and is not to be used or distributed for any other purpose without prior written consent from the content author(s).
Policy about course outlines can be found in Course Requirements, Evaluation Procedures and Grading of the University Calendar.
5) Assignments, Exams and Grading
Course grades will be determined by combining points on homework assignments, a midterm exam and a final exam. The following table shows the component marks available to students. Grades will be allocated after considering the relative performance of each student (curving).
Homework assignments
8% There are four graded homework assignments. These assignments are intended to provide additional practice of key concepts and are important for exam preparation. Each assignment accounts for 2 percentage points of the overall course mark. For each assignment, students who score 25% or more pass the assignment and receive 2 percentage points; students who score less than 25% receive a zero.
The solutions will be posted, and it is highly recommended that you compare your answers to the posted solutions.
Each homework assignment is due on the date of the next class.
Answers to assignments will be submitted through a quiz on eClass.
Submissions are accepted until 9 am on the due date.
Midterm exam (90 minutes)
40% The exams will be held in person (tentative to COVID updates) and will be open-book, with the tools listed below.
The exams must be solved individually. Any collaboration is strictly prohibited. You must accept the Academic Integrity Statement before you can start the exam. Any violations or any ‘cheating’ attempts will be investigated and enforced as strictly as University policies allow.
The midterm exam will comprise material from the lectures covered before the midterm exam.
Final exam (140 minutes)
52% The exams will be held in person (tentative to COVID updates) and will be open-book, with the tools listed below.
The exams must be solved individually. Any collaboration is strictly prohibited. You must accept the Academic Integrity Statement before you can start the exam. Any violations or any ‘cheating’ attempts will be investigated and enforced as strictly as University policies allow.
The final exam will comprise material from the whole course with greater emphasis on the portions not covered by the midterm exam.
TOTAL 100%
Submitting the answer to an exam question in the correct number format (as indicated in every exam question) is part of answering the question correctly. Failure to do so will result in a mark of zero. No exceptions will be made.
Sharing, posting, and viewing any material (e.g., slides, homework assignments, exam questions, solutions, etc.) on any medium (e.g., Facebook, message board, Chegg, Course Hero, etc.) is strictly prohibited. If you come across any such postings, please contact me at [email protected].
6) Readings and Lecture Schedule
The proposed class schedule is as follows. The schedule may be modified as the semester progresses if topics take more or less time than planned. Readings and/or chapters from the text may be added or deleted at a later date. Please ensure you have read the relevant materials before each session.
Week Date Topic Textbook Readings
1 Tue May 10 Introduction + Time value of money 1 Ch. 1 Ch. 3 Wed May 11 Seminar 1: Time value of money 1
Thurs May 12 Time value of money 2 Ch. 4
Ch. 5.1 and 5.2 Fri May 13 Seminar 2: Time value of money 2
2 Tue May 17 Bond valuation Ch. 6 (all); Ch. 15.2 and 15.3
Ch. 6, Appendix C (Duration) Ch.
5.3 (Inflation) Wed May 18 Seminar 3: Bond valuation
Thurs May 19 Equity valuation Ch. 7.1-7.4 and Ch. 7.7
Fri May 20 Seminar 4: Equity valuation
3 Tue May 24 Project valuation 1 Ch. 8
Ch. 9.1-9.4 Wed May 25 Seminar 5: Project valuation 1
Thurs May 26 Project Valuation 2 + Midterm review Ch. 9.5, 9.6 Fri May 27 Seminar 6: Project valuation 2
4 Tue May 31 Mid-term exam
watch the video lecture “Risk and return 1” All the chapters above
Thurs June 2 Risk and return 2 Ch. 10
Ch. 11 Fri June 3 Seminar 7: Risk and return
5 Tue June 7 Options Ch. 13
Wed June 8 Seminar 8: Options
Thurs June 9 Cost of capital Ch. 12
6 Tue June 14 Capital structure Ch. 16
Wed June 15 Seminar 9: Capital structure
TBD Final Exam All the chapters above
7) Recommended End-of-chapter Problems
Recommended end-of-chapter problems from Fundamentals of Corporate Finance, by Berk, De Marzo, Harford, Stangeland and Marosi: either the 2nd or 3rd Canadian editions. These recommendations are to help you learn and understand the material – they do not mean the exam questions will be like these. 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 time, if any, you spend on solving the end-of- chapter problems will depend on how helpful you find them in understanding the material. The problem answer key is available in eClass.
Week Topic Fundamentals of Corporate Finance, Berk, De Marzo, et. al.
3rd Canadian Edition
1 Time value of money 1 Ch. 1: 1, 2, 9, 10, 16, 17, 18, 19 Ch. 3: 9-12, 15, 16, 18-31
1 Time value of money 2 Ch. 4: 5-19, 21, 22, 24-36, 39-43 Ch. 5: 1-6, 11-17, 25
2 Bond valuation Ch. 6: 1-3, 9, 11-16, 19, 21-23, 25, 26 Ch. 5: 28, 29
2 Equity valuation Ch. 7: 4-11, 13-16, 17-21, 36, 39ab
3 Project valuation 1 Ch. 8: 1-10, 13, 14, 17, 19, 20, 23-26, 33, 34, 36
3 Project valuation 2 Ch. 9: 4, 8, 9, 10b, 13, 15-17
4 Risk and return 1 Ch. 10: 1-4, 10, 11a, 12acd, 18
4 Risk and return 2 Ch. 11: 1-5, 8-13, 16, 19-21, 23-25, 28-36
5 Options Ch. 13: 2-7, 9-11
5 Cost of capital Ch. 12: 1-3, 6-13, 15-24 (YTM = EAR unless stated otherwise)
6 Capital structure Ch. 16: 3abc, 4-6, 12, 13, 15-19, 21
DON’T
view or copy someone else’s online practice or homework solutions;
allow someone else to view or copy or enter your online practice or homework solutions;
exchange online practice or homework solutions (e.g. via e-mail, social networks, on paper, etc.);
communicate with anyone other than the course officials during the exams; or
access course materials (assignments, solutions, exams) from prior semesters that have not been provided equally to all students by the instructor.
DO (for homework assignments)
discuss the course material with other students;
ask classmates for help when you are stumped;
offer help to other students;
your own work;
participate in study groups; and
participate in the discussion board and give hints, explanations, and
clarifications (but without disclosing full or partial solutions).
8) Missed Assessment and Deferred Exams
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 submit your homework. With supporting documentation, the weight of the missed homework will be transferred equally to the remaining homework assignments (or to the Final exam if you miss the last assignment).
If you miss a midterm exam, we require supporting documentation pertaining to the absence within two business days following the missed midterm exam (or as soon as possible with regards to the circumstances underlying the absence). If you can provide supporting documentation, the weight of the missed midterm will be applied to the Final exam. If you do not have supporting documentation, you will receive a mark of zero.
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. More information can be found in Academic Regulations, University Regulations and Information for Students of the University Calendar.
9) Disagreements with Assessments
Your grades will stand as posted online unless any mistakes are drawn to my attention in a timely manner. Grades will normally be available within one week of exams. Once a final grade is assigned, it will not be changed except in the case of a recording error.
If you feel that any midterm or final grade is incorrect, please notify me by e-mail within one week from the posting of the grades online (or as soon as practical in cases of extenuating circumstances).
Please note that any query about an exam mark will normally result in the entire exam being remarked, which may lead to your mark going up or down. I may send your paper for remarking by a different marker, or I may invite you to witness me remarking the paper.
10) Academic Integrity
I expect honesty and integrity from students. Cheating of any kind will be dealt with sternly per policy. All exams and online practice are individual work. To help you judge what we consider acceptable and nonacceptable collaboration on assignments, consider the following examples of DOs and DON’Ts:
