University of Alberta School of Business
Department of Finance and Statistical Analysis
FIN 301 Introduction to Finance Winter 2016
1. Lectures
Instructor András Marosi
Office BUS 2-32F
Phone 780-492-5365
E-mail [email protected]
Lectures Tuesday and Thursday 3:30-4:50pm, CCIS 1-430
2. Seminars/Labs
Instructor Ruchith Dissanayake Parianen Veeren Ahmad Al-Haji E-mail [email protected] [email protected] [email protected]
Seminars Monday Wednesday Friday
J1, 1:00-1:50pm, BUS 1-9 J3, 1:00-1:50pm, BUS 1-9 J5, 1:00-1:50pm, TB 95 J2, 2:00-2:50pm, BUS 1-5 J4, 2:00-2:50pm, BUS 1-5 J6, 2:00-2:50pm, BUS 1-5
3. Office Hours
Day Monday Tuesday Wednesday Thursday Friday
Instructor Ruchith Dissanayake András Marosi Parianen Veeren András Marosi Ahmad Al-Haji Time 10:30am-12:30pm 1:30-2:30pm 10:30am-12:30pm 1:30-2:30pm 10:30am-12:30pm
Office BUS 4-27 BUS 2-32F BUS 4-27 BUS 2-32F BUS 4-27
By appointment Send email to [email protected], subject: instructor’s name
4. Course Objective
This course is intended to provide a market-oriented framework for analyzing the major types of financial decisions made by corporations. Lectures, readings, and assignments will provide an introduction to discounted cash flow techniques, financial asset valuation, capital budgeting principles and problems, enhance your understanding of dividend policy, capital structure and related corporate finance issues, and introduce you to derivative securities.
This course provides the basis for all other classes in Finance as well as the basic tools each business student needs to be successful in her/his career. In addition, regardless of a student’s chosen field of study, this course will provide basic tools to make personal financial decisions.
5. Textbook choices (choose either Berk et al. 2nd Canadian editon OR Ross et al. 8th Canadian edition – students do NOT need to buy both)
Fundamentals of Corporate Finance, 2nd Canadian Edition; Berk, DeMarzo, Harford, Stangeland and Marosi, 2016, Pearson Canada
Fundamentals of Corporate Finance, 8th Canadian Edition; Ross, Westerfield, Jordan, and Roberts, 2013 (2010), McGraw-Hill Ryerson, Toronto. (7th edition )
6. Office Hours, E-mails, Discussion Board, and Announcements
Office hours are as stated above and by appointment. In most cases I will also be available to answer questions after class (wait for me outside the class room if you have questions).
We are also available by e-mail. Under normal circumstances, e-mail questions will be answered within 48 hours.
to the sender. Be sure that you check the Discussion Board before you e-mail your questions to an instructor. You will not receive personal attention for questions that have their answers available on the Discussion Board. Your e- mail must be sent to [email protected] and must be addressed to a specific instructor in the subject line (e.g., SUBJECT: Marosi - Assignment 1, Question #3). E-mails not addressed to a specific instructor will not be read.
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. As a minor courtesy, please include your name in all your e-mails. Exchanging e-mails with usernames like skg103 or qqq41 is simply less rewarding than writing an answer to Jack or Jill, or whatever your name may be.
Important announcements (about exams, assignments, etc.) will be posted on Ulearn and may also be sent to your student university e-mail address. Students are expected to check Ulearn and their [email protected] e-mail account regularly for new announcements.
7. Assignments, Exams, and Grading
Course grades will be determined by combining points on homework assignments, two midterm exams, and a final exam.
If you miss a midterm exam, I require supporting documentation pertaining to the absence within two working days following the missed 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 zero on the exam.
If you feel that your midterm mark is incorrect, you must notify me in writing during the one-week period following the posting of the midterm marks online. 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. For more information consult Section 23.5.6 of the University Regulations and Information for Students in the University Calendar.
In the event that a deferred final exam is granted, the deferred final exam will be at 9:00am on Monday, May 16, 2016.
The weights given to assignments and exams are:
Assignments Weights (% of Total Grade)
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 indicated in this syllabus. Answers to assignments will be submitted via the course website; 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 a total of six homework assignments. These assignments are intended to provide additional practice of key concepts and are important for exam preparation. Each of these assignments accounts for 1 percentage point of the overall course mark. For each assignment, students who score 33% or more pass the assignment and receive 1 percentage point; students who score less than 33% receive a zero. The solutions to the assignments will be posted on the course website and it is highly recommended that you compare your answers to the posted solutions.
The course is roughly divided into three parts. The first midterm (~65 minutes; held during regular class time) covers all the material of the first part of the course. The second midterm (again ~65 minutes; held during regular class time) covers the material of the second part. And for the final exam (120 minutes; 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.
You cannot hope to absorb the material by “cramming” the week before the exams! All assigned sections of the text should be read. You cannot assume that all the material needed for the exams will be covered in class.
Homework assignments, midterm exams, and final exam represent the only marks available to students.
Extra work to improve your grade is not 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:
Accumulated Points Final Grade 95% or more Guaranteed A+
At least 90% Guaranteed A
50%-89% Guaranteed pass (depending on class performance A-D)
Less than 50% At risk to fail (F)
The University provides a translation between the letter grades and the numeric equivalents used for calculating GPA’s on this web page.
8. Exam Procedures
Bring your picture ID, your calculator, and writing implements to all examinations. No red or green pens are allowed, and students writing the exam in pencil may be unable to contest the accuracy of their mark. Be sure to bring your own calculator and be sure that the batteries have sufficient power. For the midterm exams, students will be allowed to use one 8½×11 inch “cheat sheet” and can use both sides of the sheet. For the final, students will be allowed to use three 8½×11 inch “cheat sheets” (again, you can use both sides). There are no restrictions on what students can put on these sheets but they must be in own handwriting or in standard font (i.e., Times New Roman, Arial) and standard font size (i.e., at least 10pt).
9. Calculator, End-of-chapter Problems, and General Information
Your calculator is a tool and cannot substitute for an understanding of the problem solving process. As far as use of your calculator is concerned, I suggest you consult the user’s manual. Additional help is available under Resources on the course website for students who own a Texas Instruments BA II PLUS financial calculator. Instructors will not be spending time (in class or in office hours) explaining the use of the Texas Instruments BA II PLUS. This (or any other financial calculator) is not a required tool for this class; all exam questions can be solved without a financial calculator.
I have designated some end-of-chapter problems that I 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, if any, time you should spend on solving the end-of-chapter problems will depend on how helpful you find them in helping you understand the material covered in class. Answers to some of the problems are in the back of the text and the answer key for all of the problems is posted on the course web site.
Missed classes are solely your responsibility. If you want to know what was covered in a class that you missed (including announcements), you will have to find a classmate who attended class and is willing to share her/his notes. I have doubts about any student’s ability to pass this course if she/he fails to attend class. Regular class attendance is expected.
Recording is permitted only with the prior written consent of the professor or if recording is part of an approved accommodation plan. If an instructor (or Specialized Support and Disability Services) grants permission, the recording is solely for the personal use of the student to enhance their understanding of the lecture material.
10. Academic Integrity
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
11. Seminar Schedule
Below is the schedule for the seminars. Please note there are no seminars scheduled on the following days: Jan 4, 6 and 8; Feb 1, 3 and 12; Mar 7 and 9; and Apr 6 and 8.
Seminar Topics Sections and Dates
Monday (J1, J2) Wednesday (J3, J4) Friday (J5, J6)
1 Time value of money I Jan 11 Jan 13 Jan 15
2 Time value of money II Jan 18 Jan 20 Jan 22
3 Bond valuation Jan 25 Jan 27 Jan 29
4 Equity valuation Feb 8 Feb 10 Feb 5
5 Project valuation I Feb 22 Feb 24 Feb 26
6 Project valuation II Feb 29 Mar 2 Mar 4
7 Risk and return Mar 14 Mar 16 Mar 11
8 Options Mar 21 Mar 23 Mar 18
9 Capital structure Apr 4 Mar 30 Apr 1
12. Tentative 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 schedule needs to be somewhat flexible. That said, homework due dates and the midterm dates are not flexible. If I need to extend a homework deadline due to unforeseen circumstances, I will extend it for the entire class.
All chapters and problem numbers refer to the 8th edition of the Ross textbook. (Unfortunately, the bookstore has not received the 2nd edition of the Berk on time. I will post a list of recommended problems for the Berk text in a separate document as soon as the textbook becomes available).
Date Topics Covered Readings Recommended Problems1 Special Events
Jan 5 Introduction Ch. 1, 1.1-1.6, Ch. 2 (all) CRQ: 1.1, 1.2, 1.3, 1.13, 2.1, 2.3, 3.1 Q&P: 2.29 [in 7th Edition: 2.30], 2.34 [2.35]
Jan 7 Time value of money Ch. 5 (all) Q&P: 5.1-5.6, 5.9, 5.14, 5.17, 5.20
Jan 12 Time value of money Ch. 6.1-6.2 Q&P: 6.2, 6.5, 6.15, 6.16, 6.23, 6.25, 6.27, 6.40 Jan 14 Time value of money Ch. 6.3-6.4 Q&P: 6.50, 6.56, 6.63, 6.73 [6.75], 6.76 [6.78]
Jan 19 Bond valuation Ch. 7.1-7.6 Q&P: 7.1, 7.3, 7.8-7.11, 7.24, 7.26a, 7.26b
Jan 21 Bond valuation Appendix 7A Q&P: 7A.3
Jan 25 HW #1 due
Jan 26 Equity valuation Ch. 8 (all) Q&P: 8.4. 8.9, 8.15, 8.16, 8.21, 8.23 Jan 28 Equity valuation
Feb 1 HW #2 due
Feb 2 Review
Feb 4 Midterm #1 Exam
Feb 9 Investment decisions Ch. 9 (all) Q&P: 9.7, 9.8, 9.12, 9.13, 9.15, 9.17, 9.18
Feb 11 Project valuation Ch. 10 (all) Q&P: 10.7-10.10, 10.21, 10.27, 10.28, 10.36, 10.46
Feb 12 HW #3 due
Feb 15-19 Reading week Reading week
Feb 23 Project valuation Feb 25 Project valuation
Mar 1 Risk and return Ch. 12 (all) Q&P: 12.1-12.3, 12.4, 12.9-12.11, 12.15, 12.16 Mar 3 Risk and return Ch. 13 (all) Q&P: 13.1, 13.4, 13.7, 13.10, 13.15, 13.23, 13.24
Mar 7 HW #4 due
Mar 8 Risk and return & Review
Mar 10 Midterm #2 Exam
Date Topics Covered Readings Recommended Problems2 Special Events
Mar 15 Options Ch. 24.6, Ch. 25.1 CRQ: 24.2, 24.7
Q&P: 24.4
Mar 17 Options Ch. 25.2, 25.3, 25.5, 25.9,
Appendix 25A
CRQ: 25.2, 25.5, 25.6, 25.7, 25.10 Q&P: 25.2-25.4, 25.6, 25.8, 25A.1 Mar 22 Cost of capital Ch. 14.1-14.5, 14.7 Q&P: 14.1, 14.4, 14.7, 14.9, 14.16, 14.17 Mar 24 Capital structure Ch. 16 (all) Q&P: 16.1, 16.4, 16.8, 16.16, 16.17, 16.23 Mar 29 Capital structure
Mar 30 HW #5 due
Mar 31 Payout policy Ch. 17 (all) Q&P: 17.4, 17.7, 17.12, 17.14, 17.15
Apr 5 Market efficiency, Raising capital (if time permits)
Apr 7 Review
Apr 8 HW #6 due
Apr 21 Final (tentative) Final