University of Alberta ALBERTA BUSINESS SCHOOL
FIN 501 Professor: Egor Matveyev
Managerial Finance Office: Business Building 2-32B
Winter 2013 [email protected]
Objective This course covers the basics of the theory and practice of corporate finance. The course provides a market-oriented framework for analyzing both the investment and financing decisions made by corporations.
Lectures and readings provide an introduction to discounted cash flow techniques, capital budgeting principles and problems, interest rates, financial asset valuation and modern portfolio analysis, capital market efficiency and capital structure.
Required Text Jonathan Berk, Peter DeMarzo, and David Stangeland, Corporate Finance, Second Canadian Edition (Pearson Canada, 2012). I will refer to the text as BDS.
Supplementary Text Richard Brealey, Stewart Myers, and Franklin Allen, Principles of Corporate Finance, 10th Edition (New York: McGraw-Hill, 2011).
Class/Lab Schedule The class will meet every Tuesday and Thursday from 10:30 am to 11:50 am (morning section B1), and every Tuesday 6:30 pm to 9:30 pm (evening section X51).
Office Hours I will hold office hours on Tuesdays from 4:00 pm to 6:00 pm.
Grades Your grade will be based on three quizzes (15% each), four team homework assignments (5% each), and the final exam (35%). I accept no late assignments and there are no makeup quizzes except in extenuating circumstances. The final exam can replace any grade. Therefore, any missed assignments (or quizzes) simply add to the weight of the final exam. Please do not leave town before the final exam, which is tentatively scheduled by the registrar’s office for Monday, April 22 (for B1) and Tuesday April 16 (for X51). Note that these dates are tentative. The percentage weights are approximate. I will also take into account the quality of your class participation. Name cards are required at every class. Any requests for re-grading must be made in writing.
Homework The four homework assignments are to be completed in groups of 3 or 4 students. Assuming all problems in an assignment are reasonably attempted the assignment will be graded on a ü++ (100%), ü+ (92.5%), ü (85%), ü- (70%) scale. If some or all of the problems are omitted the grade may vary accordingly. Team assignments are an integral part of this course. Teams working on assignments may not communicate with each other or use other resources such as answer keys distributed in other
sections or courses (this would be an honor code violation). Team assignments will be collected at the beginning of class. Late assignments are not accepted. I often go over homework problems in class. Homework assignments may cover material not yet discussed in class. This allows for better use of class time.
Website The FIN501 website can be accessed through Blackboard. The site contains the most up to date course information. To access the class page you must login with your CCID and password to http://ulearn.ualberta.ca.
Readings The outline below provides the chapters in BDS that are associated with each lecture. Note that there are more classes than lectures. Each lecture is not designed to fit exactly into one three hour class. In addition to the text I will often pass out articles in class that are related to the lectures.
Course Outline – Subject to Revision
Date Topics Readings (Book
Chapters) Due January 8 Corporate Objectives
Foundations of the Net Present Value 1.1-1.3
January 15 Valuing riskless cash flows 3.1-3.3; 4.1-4.5 January 22 Valuing riskless cash flows
Interest Rates
3.1-3.3; 4.1-4.5 5.1-5.3; 5.5; 8.A
HW1
January 29 Bond valuation 8.1-8.4, 30.4 Quiz 1
February 5 Bond valuation Stock valuation
8.1-8.4, 30.4 9.1-9.2, 9.4
February 12 Stock valuation 9.1-9.2, 9.4 HW2
February 26 Using NPV and other decision rules 6.1-6.5, 7.1-7.4 Quiz 2
March 5 Portfolio Theory 10.2-10.6, 11.1-11.6
March 12 Portfolio Theory
Capital Asset Pricing Model (CAPM)
10.2-10.6, 11.1-11.6 10.7-10.8, 11.7-11.8
HW3
March 19 Capital Asset Pricing Model (CAPM)
Weighted Average Cost of Capital (WACC)
10.7-10.8, 11.7-11.8 12.1-12.7
March 26 Market Efficiency 9.5, 13.2-13.5 Quiz 3
April 2 Option Pricing 20.1-20.6, 21.1-21.3
April 9 Review Session HW4
April 22, Monday 9:00 am
FINAL EXAM
