Finance 357 Syllabus

Spring 2000
Unique Numbers 02570,
02575  
UTC 4.110


Contents

Teaching Assistant Prerequisites Text Course Description Schedule
Email Web Evaluation Course Policies Study Guidelines

Instructor: Dr. Richard MacMinn

Teaching Assistant:


Prerequisites:

Basic accounting and statistics are essential to understanding the principles developed in this course. If you have not had these courses as required by the college then you should withdraw now. Finance 357 is one of the most quantitatively oriented core courses you will take and you need to be adequately prepared.

Some computer skills are also required for this section of Finance 357. You need to be familiar with the basic operation of either a PC or a Mac. You must also be willing to learn how to use software including applications like Outlook, Internet Explorer and Netscape that will allow you to send and receive email and navigate the web, respectively. Using an email system is a generic communication skill that most companies will expect you to have; in this course, you will be able to contact me this way and I will expect you to submit some assignments this way. Using the web is also a generic communication skill; we will use the web to get current corporate information such as stock price histories, quarterly and annual reports, proxy statements, etc. that might not otherwise be available to us on a timely basis. Further, you will be provided with course information via the web server for this course.


Textbook:  

Keown, Petty, Scott and Martin, Foundations of Finance: The Logic and Practice of Financial Management 

Burton Malkiel, A Random Walk Down Wall Street 

Other Material:
We will be using the following two formula sheets.  In addition, you may want to go to LiveMath and download the free LiveMath plug-in.  I will be using the LiveMath software to demonstrate the solutions to some problems and I will make those solution available on the web.  You will need the plug-in to view the solutions.

Financial Ratios Formula Sheet

Formula Sheet


Course Description:

Business Finance is concerned with the concepts and analytical techniques necessary to identify and analyze financial performance and problems. The present and future value notions are critical in finance; these notions will be developed early, and then applied repeatedly in a variety of settings. The risk and return notions are also critical and will be introduced early, and then applied in the remaining development of the subject. Using the risk and return notions requires some sophistication in probability and statistics since mean, variance, and covariance all play a role in their development. You will be expected to demonstrate an understanding and proficiency in using these notions by solving increasingly complex problems.

This semester I will continue developing an integrated set of lecture notes. The lecture notes will provide links between the formulas that we develop, a formula sheet, and problems that demonstrate the use of the formulas. The lecture notes will also provide links to excel spreadsheets and LiveMath notebooks as appropriate; the LiveMath is a math software program that allows you to perform simple algebraic operations in an intuitive way. I will also provide links to other parts of the internet that provide financial information that is relevant to this course, such as EDGAR and Security APL. Follow the links here for more information on the topics, for links to the lecture notes, and for the assignments.

The outline of the course below contains links to lectures given in the Fall of 1999. Links to the new lectures will be provided in the schedule as they are updated. The following major topics will be covered:


Schedule:

Class Day

Topic

Suggested Problems

Assignment

Wednesday
January
19

Course Introduction

 

Take the pre-screen quiz at MedWeb.
Due January 26

Friday 
January 21

Keown 1, 17
Financial Management
Chapter 1: 2, 5, 6
Study Guide
Search the briefing books at the Wall Street Journal or any other source for a company that interests you.  Submit the URL for the company's homepage.  Submit the assignment in an email message to Mayuresh.Masurekar@bus.utexas.edu  Due January 28.

Monday
January 24

Keown 2, 17
Malkiel 1, 2
Financial Markets

Chapter 2: 1-3, 5
Study Guide
Spreadsheet

  Search for articles on the Glass-Steagall Act. Provide the article's URL.   When was an agreement reached on its repeal?  What impact will the demise of Glass-Steagall have on financial markets?  Submit the assignment in an email message to Mayuresh.Masurekar@bus.utexas.edu.  Due January 31.

Wednesday 
January 26

Keown 2, 17
Malkiel 1, 2
Financial Markets

 

Friday 
January 28

Keown 3
Financial Performance
Chapter 3: 1-5
Study Guide

Spreadsheet
Search EDGAR for a company that interests you. Get the latest 10-K for that corporation and calculate the following financial ratios: total asset turnover, net profit margin, leverage ratio, return on assets, and return on equity. Submit the URL of the 10-K and the financial ratios in an e-mail message to mayuresh.masurekar@bus.utexas.edu as financial ratios assignment
Due February 9

Monday 
January 31

Keown 3
Financial Performance

 

    

Wednesday
February 2


Keown 5
Time Value

Chapter 5: 1-6, 11, 13, 15-22, 25, 26, 30
Study Guide
Spreadsheet

 

Friday
February 4

Keown 5
Time Value
   

Monday
February 7

Keown 5

 

  

Wednesday
February 9

Keown 5
Time Value

 

Take the Time Value of Money quiz at MedWeb
Due February 16

Friday
February 11

Keown 6
Malkiel 13
Bond Value
Chapter 6: 1-6
Study Guide
Spreadsheet
 

Monday
February 14

Keown 6
Malkiel 13
Bond Value

 

    

Wednesday
February 16

Keown 6
Malkiel 13

   

    

Friday
February 18

Review    

Monday
February 21

Exam One

   

Provide some feedback on how the course is going and how it might be improved.
Due March 7

Wednesday
February 23

Keown 7
Malkiel 3, 13
Stock Value

Chapter 7: 1-6, 8-10
Study Guide
Spreadsheet

   

Friday
February 25

Keown 7
Malkiel 3, 13
Stock Value
   

Monday
February 28

Keown 7
Malkiel 3, 13
Stock Value
 

   

Wednesday
March 1

Keown 8
Malkiel 5-8, 9-10
Risk and Return

Chapter 8: 1-8, 10, 11
Study Guide
Spreadsheet

   

Friday
March 3

Keown 8
Malkiel 5-8, 9-10
Risk and Return
  Select a publicly held company of interest to you. Go to Quote.ComPCQuote or MarketGuide, to get a quote and the company's beta. Submit  the company quote and the company beta in an e-mail message to mayuresh.masurekar@bus.utexas.edu as the beta assignment
Due March 10

Monday
March 6

Keown 8
Malkiel 5-8, 9-10
Risk and Return

 

Take the Risk & Return quiz at MedWeb
Due March 10

Wednesday
March 8

Keown 9
Capital Budgeting

Chapter 9: 1-2, 4-8, 11-15
Study Guide
Spreadsheet

 

 

Friday
March 10

Keown 9
Capital Budgeting
   

Monday
March 13

Spring Break

   

Wednesday
March 15

Spring Break

   

Friday
March 17

Spring Break

   

Monday
March 20

Keown 9
Capital Budgeting

Take the Topics in Capital Budgeting quiz at MedWeb
Due March 31

Wednesday
March 22

Keown 10
Topics in Capital Budgeting

Chapter 10: 1-4
Study Guide
Spreadsheet

Take the Capital Budgeting quiz at MedWeb
Due March 31

Friday
March 24

Keown 10
Topics in Capital Budgeting

   

Monday
March 27

Review

   

   

Wednesday
March 29

Exam Two

   

   

Friday
March 31

Keown 11
Cost of Capital
Chapter 11: 1-5
Study Guide
Spreadsheet
 

Monday
April
3

Keown 11
Cost of Capital

 

   

Wednesday
April 5

Keown 11
Cost of Capital

 

Take the Cost of Capital quiz at MedWeb
Due April 18

Friday
April 7

     

Monday
April 10

Keown 12
Financial Structure

Chapter 12: 1-4, 9-12
Study Guide
Spreadsheet

Search the database at Edgar for the 10-K of a company of interest to you. Submit the URL of the 10-K  in an email to the TA, mayuresh.masurekar@bus.utexas.edu as 10K assignment
Due April 18

Wednesday
April 12

Keown 12
Capital Structure

Chapter 12: 1-4, 9-12
Study Guide
Spreadsheet

Using the company 10-K that you submitted in the last assignment, calculate the breakeven sales, degree of operating leverage, degree of financial leverage, and degree of combined leverage. Submit these numbers along with the URL for 10-K in an email to the TA, mayuresh.masurekar@bus.utexas.edu as breakeven assignment
Due April 19

Take the Leverage quiz at MedWeb
Due April  19

Take the Capital Structure quiz at MedWeb
Due April 21

Friday
April 14

     

Monday
April 17

Keown 13
Dividends

Chapter 13: 1-8
Study Guide
Spreadsheet

 

Wednesday
April 19

Keown 13
Dividends

   

     

Friday
April 21

Keown 13
Dividends
  Take the Dividend quiz at MedWeb
Due April 26

Monday
April 24

    

   

Wednesday
April 26

Review

   

 

Friday
April 28

Exam Three

   

Monday
May 1

Keown 17

    

   

Wednesday
May 3

Review

Chapters 1-13, 17

    

Friday
May 5

Review

Chapters 1-13, 17  


Electronic Mail:

You will be expected to become proficient in using electronic mail. It is important that you check for email messages on at least a daily basis since this will be one of the primary methods we have for communication outside of class. It is also important for you to learn how to attach documents to email messages so that we can strive to make this course as paperless as possible. Assignments must be submitted via email unless otherwise specified.

The computation center has established the University Mailbox System (UMBS). If you are a registered student then you already have an account for email. To activate your UMBS mailbox, use the Telnet program to connect to the UMBS host called mail.utexas.edu. You will be asked to identify yourself by supplying your UTID, name, and date of birth. If the values you supply match official University records, you will be requested to choose a password and a mailbox name. Guidelines for composing these are displayed on-screen. Your mailbox is created immediately and so you can start sending and receiving email immediately. Your email address takes the form mailboxname@mail.utexas.edu. All the lab assistants in the business school labs should be able to assist you if you encounter problems. If you click on the following anchor you will begin a telnet session to activate your email account. From there just follow the instructions on screen.

For those of you who want extra help activating your email account, here is the course description and a link to the schedule for email orientation sessions. In these classes, you will activate your UMBS mailbox, configure an email client and send a message.

The computation center runs a number of short courses that may interest you. The computation center short course schedule is here. Also check out the training services homepage.


The Web:

You will be given a short introduction to web during the first week of class. Netscape and Internet Explorer are client applications that give you access to the web. Lecture notes and other materials will be provided through my Corporate Finance web pages.


Course Evaluation:

    Your course scores and averages will be available online.  You will be given the access information in class.

.1A + .9 max{.33 I + .33 II + .34 III, F, .2 I + .2 II + .2III + .4 F},

where I, II, III, and F indicate the scores on exams one, two, three and the final, respectively. A represents an average of the assignment scores. The assignment score will be an average score for assignments given to you during the semester. All assignments will be pass or fail.  The pass and fail scores are one and zero, respectively.  In the case of quizzes a passing score is 85% or better and you may take the quiz as many times as necessary.  Finally, at my discretion, the assignment score may also be based on class attendance. The course scores will determine your grade in the class as follows:

90-100 A
80-89 B
70-79 C
60-69 D
0-59 F

Course Policies:


Study Guidelines:

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