FIN 301 – Introduction to Finance Department of Finance
Winter 2022
1. Lectures and Seminars/Labs
Lectures Seminars/Labs
Instructors Lukas Roth Andras Marosi
Wenjie Chen
E-mail [email protected] [email protected]
Office Hours Remote; Tuesday, 1:00-2:30pm; or by appointment
Remote; Monday (9-10am), Wednesday (9-10am), Thursday (9-10am), and Friday (10-12pm); or by appointment
Lectures Tuesday and Thursday, 3:30-4:50pm See Bear Tracks for details
(https://www.beartracks.ualberta.ca/) Course Delivery Remote delivery in live Zoom sessions at
the times indicated above (synchronous delivery).
Lectures will be recorded, and recordings will be available on eClass.
Pre-recorded seminar videos (asynchronous) available on eClass.
SEM Hx/Jx: At least until January 23, remote delivery in live Zoom sessions (synchronous delivery). Remote seminars will be recorded, and recordings will be available on eClass.
Zoom Meeting Links Zoom meeting links are posted on eClass.
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 tools each business student needs to master. 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.)
4. Class Material, Office Hours, E-mails, and Announcements
All relevant course material, including slides, assignments, practice problems, solutions, etc. are available on eClass.
Office hours are stated above and by appointment.
We are available by e-mail. Your e-mail must be sent to [email protected] and must be addressed to a specific instructor in the subject line. E-mails not addressed to a specific instructor will be deleted. 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.
Important announcements (about exams, assignments, etc.) will be posted on eClass and sent to your student university e-mail address ([email protected]).
You cannot expect an answer to questions that we specifically answered/discussed in class. If you do not receive an answer, review the recorded lectures, or ask a classmate.
5. Assignments, Exams, and Grading
Course grades will be determined by combining points on homework assignments, midterm exams, and a final exam.
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 equally to the remaining exams. If you do not have supporting documentation, you will receive a mark of zero.
If you feel that your midterm mark is incorrect, you must notify us in writing during the one-week period following the posting of the midterm marks. 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.
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.
If a deferred final exam is granted, the deferred final exam will be on Tuesday, May 17, 2022 at 9:00am.
The weights given to assignments and exams are:
Assignments Percentage
Homework 6% (1% each)
Midterm exam #1 25%
Midterm exam #2 25%
Final exam 44%
Total 100%
Each homework assignment is due on the date shown in the table below. Answers to assignments will be submitted through a quiz on eClass. Submissions are accepted until 4pm on the due date. Late submissions will not be accepted for any reason. 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 if you miss the last assignment).
There are six homework assignments. These assignments are intended to provide additional practice of key concepts and are important for exam preparation. Each assignment accounts for one percentage point of the overall course mark.
For each assignment, students who score 25% or more pass the assignment and receive one percentage point; 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. Homework due dates are as follows:
Homework Due Date (by 4pm)
1 Jan 31
2 Feb 7
3 Feb 18
4 Mar 14
5 Mar 25
6 Apr 8
The course is roughly divided into three parts. The first midterm (held during regular class time) covers all the material of the first part of the course. The second midterm (held during regular class time) covers the material of the second part. And for the final exam (held during the final exam period) approximately 75% of the questions cover the material of the third part of the course, and the rest of the questions equally cover the (essential) material of the first two parts. Sample midterm and final exams will be provided.
You cannot hope to absorb the material by “cramming” the week before the exams! While the final will focus on the material covered following the midterm, finance is a cumulative discipline. Students with a poor understanding of the midterm material are unlikely to do well on the final. All assigned sections of the text should be read. You cannot
Homework assignments, midterm exams, and final exam represent the only marks available to students. Extra work to improve your grade will not be offered.
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 50%
or more of the total points available will not receive a grade below D (guaranteed pass). Students accumulating fewer than 50% of the total points available are at risk to receive a grade of F.
The following table may be helpful:
Points Final Grade 95% or more Guaranteed A+
At least 90% Guaranteed A
50%-89% Guaranteed pass (depending on class performance A to D)
Less than 50% At risk to fail (F)
Once assigned, the final grade in the class will not be changed except in the case of a recording or grading error.
The University provides a translation between the letter grades and the numeric equivalents used for calculating GPA’s can be found in Evaluation Procedures and Grading System, Academic Regulations of the University Calendar.
6. Exam Procedures
Exams will be administrated on eClass in the form of quizzes. Details will be provided in class.
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.
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].
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.
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. Instructors will not spend any time (in class or in office hours) explaining the use of your calculator. A financial calculator (e.g., the Texas Instruments BA II PLUS) is not required; all exam questions can be solved without a financial calculator.
We have designated some end-of-chapter problems that we 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 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.
Audio or video recording, digital or otherwise, of lectures, labs, 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).
Policies about course outlines can be found in Course Requirements, Evaluation Procedures and Grading of the University Calendar.
8. Academic Integrity
The University of Alberta is committed to the highest standards of academic integrity and honesty. Students are expected to be familiar with these standards regarding academic honesty and to uphold the policies of the University in this respect. Students are particularly urged to familiarize themselves with the provisions of the Code of Student Behaviour (online at www.governance.ualberta.ca) and avoid any behaviour which could potentially result in suspicions of cheating, plagiarism, misrepresentation of facts and/or participation in an offence. Academic dishonesty is a serious offence and can result in suspension or expulsion from the University.
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 DON’Ts
• 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)
• 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
• 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.) 9. Seminar Schedule
Please note there are no seminars on days not listed in the table below.
Seminar Topics Sections and Dates
Monday Wednesday Friday
1 Time value of money I Jan 17 Jan 19 Jan 14
2 Time value of money II Jan 24 Jan 26 Jan 21
3 Bond valuation Jan 31 Feb 2 Jan 28
4 Equity valuation Feb 7 Feb 9 Feb 4
5 Project valuation I Feb 28 Mar 2 Feb 18
6 Project valuation II Mar 7 Mar 9 Mar 4
7 Risk and return Mar 14 Mar 16 Mar 11
8 Options Mar 28 Mar 30 Mar 25
9 Capital structure Apr 4 Apr 6 Apr 1
10. Course Outline
Below is a schedule to guide you in your readings and class preparation. Since some topics may take more or less time than planned, we may deviate slightly from this schedule. The end-of-chapter problems refer to the Third Canadian Edition of the textbook. Note, if you are using the Second Canadian Edition of the textbook, an older syllabus can be found on eClass that shows the chapter and end-of-chapter problem numberings for the Second Canadian Edition.
Date Topics Textbook Readings Recommended End-of-chapter Textbook Problems
Jan 6 Introduction Ch. 1 (all)
Jan 11 Time value of money Ch. 3 (all) Ch. 3: 9-12, 15, 16, 18-31
Jan 13 Time value of money Ch. 4 (all) Ch. 4: 5-19, 21, 22, 24-36, 39-43
Jan 18 Time value of money Ch. 5.1 and 5.2 Ch. 5: 1-6, 11-17, 25
Jan 20 Bond valuation Ch. 6 (all); Ch. 15.2 and 15.3 Ch. 6: 1-3, 9, 11-16, 19, 21-23, 25, 26 Jan 25 Bond valuation Ch. 6, Appendix C (Duration); Ch. 5.3 (Inflation) Ch. 5: 28, 29
Jan 27 Equity valuation Ch. 7.1-7.4 Ch. 7: 4-11, 13-16, 17-21, 36, 39ab
Feb 1 Equity valuation Ch. 7.7
Feb 3 Investment decision Ch. 8 (all) Ch. 8: 1-10, 13, 14, 17, 19, 20, 23-26, 33, 34, 36
Feb 8 Exam review Feb 10 Midterm exam #1
Feb 15 Project valuation Ch. 9.1-9.4 Ch. 9: 4, 8, 9, 10b, 13, 15-17
Feb 17 Project valuation Feb 21-25 Reading week Mar 1 Project valuation
Mar 3 Risk and return Ch. 10 (all) Ch. 10: 1-4, 10, 11a, 12acd, 18
Mar 8 Risk and return Ch. 11 (all) Ch. 11: 1-5, 8-13, 16, 19-21, 23-25, 28-36
Mar 10 Risk and return Mar 15 Options
Exam review
Ch. 13.1-13.5 and 13.7 Ch. 13: 2-7, 9-11
Mar 17 Midterm exam #2 Mar 22 Options
Mar 24 Options Cost of capital
Ch. 12.1-12.5 Ch. 12: 1-3, 6-13, 15-24 (YTM = EAR unless stated
otherwise)
Mar 29 Capital structure Ch. 16 (all) Ch. 16: 3abc, 4-6, 12, 13, 15-19, 21
Mar 31 Capital structure
Apr 5 Personal finance (guest lecture) Apr 7 Exam review
Apr 19 Final exam (tentative)
