ST. BONAVENTURE UNIVERSITY
Jim Mahar FIN 402 – Problems in
Finance
231 Murphy
Spring 2009
AIM: FinanceProfessor
:
e-mail: jimmahar@yahoo.com,
jmahar@sbu.edu (usually full)
Office hours:
Monday: 2:30 to 4:30
Wed: 1:30 to 2:30
Thurs: 1:30 to 2:30
Course Description
Problems in Finance (FIN402) is a course designed to implement the concepts covered in previous corporate finance courses in a way that is more in-depth and integrative than in possible through end-of-chapter questions and exams. It uses a combination of lectures, discussions and case analyses to enhance a student’s understanding of financial issues. Thus, the class will provide you with "real world" practice in many areas and on many of the skills you learned in earlier Finance classes. This class is designed as a "cap-stone" class in the area of finance and as such you will be expected to be able to draw on your expertise in all areas of Finance.
The course concentrates on the analysis of financial and other information necessary to reach a decision and therefore must draw on the student’s prior knowledge of economics, accounting, finance, quantitative methods and other areas of business.
Course Objectives
·
Upon
completion of this course, the student will be expected to:
·
create proforma financial statements and estimate external funding
requirements
·
model
sophisticated capital budgeting problems
·
apply principles
of derivative securities to capital budgeting problems.
·
analyze
and recommend simple and complex financing strategies (i.e., capital structure)
·
estimate
the cost of capital for a multi-divisional organization
·
apply
valuation techniques in a merger and acquisition
setting
This course should synthesize many of the finance program goals located
at http://ms.sbu.edu/SLAP_goals/slap_goals/Finance.doc
More on the class:
The Case Method (and other assorted ramblings):
This class is largely a "case" class. That means it will be predominantly taught using cases to illustrate points and to give you "hands-on" experience. If past history is your guide, you will both love and hate this class. It will be very fun (indeed I will be disappointed if it is not your favorite class this semester and possible ever (it was my second favorite class!) BUT it will also be one of the most frustrating classes you have ever had. It is difficult and we cover a great deal of material. I make no qualms about this not being a "cake" class. I apologize in advance for the fact that this class will take a great deal of time, but there really is no other way.
If you speak to employers one of their biggest concerns is that students do not have enough experience. This class will try to alleviate this problem. We will be examining many companies (both real and fictional) to learn from their successes as well as their failures. Thus through the experiences of those in the case, we will be expanding our own knowledge while also learning how to deal with real business experiences.
The case method of learning is beneficial in that is allows students to "get their hands dirty" and actually use the tools and techniques that were learned in other classes (both Financial Classes and other classes). You will find yourself using not only NPV, IRR, derivatives, but also EOQ, JIT, market research, and even a little common sense! ;-)
Pre-Requisites and Technology Requirements
Corporation Finance (FIN 301) and Advanced Corporate Finance (FIN 401).
You should have a sound familiarity with MS-Excel and an understanding of how
to manipulate data, formulas, and functions within MS-Excel.
Case
Studies in Finance, by Robert F.
Bruner (5th edition)
http://highered.mcgraw-hill.com/sites/0072338628/student_view0/
How
to be the Family CFO by Kim Snider (howtobethefamilycfo.com)
Recommended:
A supplementary corporate finance text like the text used in FIN 401
FinanceProfessor.com blog http://financeprofessorblog.blogspot.com/
FinanceProfessor.com class blog http://financeclass.blogspot.com//
Cases
40%
Participation
(75%) and attendance (25%)
20%
Assessment
Exam 10%
Final 25% (approx ˝ on cases, ˝ on finance
general)
Major field
exam
5% *there
will be an out of class review for this test --probably early March.
.
The Week of January 21 there
will be a mandatory "getting a job in Finance" session. Time and place to be announced in class.
Late Assignments and Exams
This
class is designed to parallel real world experience in the investment
management profession. As such, it will be a tremendous learning
experience that will help increase your marketability in the labor
market. Therefore, no late assignments will be accepted. So plan
ahead.
Stock reports, the midterm exam, and the final exam will be assigned a grade according to the following grading scale. The student’s final average will be a weighted average of these grades according to the weights above. The letter grade for the class will be assigned according to the following grading scale although I do reserve the right to curve the grades higher, but there is no guarantee of that occurring.
A 93 –
100%
A- 90 – 92%
B+ 87 – 89%
B 83 –
86%
B- 80 – 82%
C+ 77 – 79%
C 73 –
76%
C- 70 – 72%
D+ 67 – 69%
D 63 –
66%
D- 60 – 62%
F
< 60%
The
website for this course can be found at financeprofessor.com (see finance
402 and financeclass blog and .
It contains information about the course as well as files that will help for
homework and spreadsheet assignments. I will also use it to post
commentary on the progress of the course and answer frequently asked questions
(FAQs) as they arise.
University Policies
Academic Honesty Policy at St. Bonaventure University:
I am committed to St. Bonaventure University’s academic environment for students, supporting and rewarding only the highest standards of ethical behavior. That said, academic dishonesty, in any form, will not be tolerated. Please consult the St. Bonaventure University Student Handbook for a list of unacceptable practices, penalties to be assigned and procedures to be followed in prosecuting cases of alleged academic dishonesty. Further, the St. Bonaventure University Undergraduate Catalog may be consulted for specific details on all academic policies at St. Bonaventure.
Cheating will not be tolerated. Unless specifically stated in class, students can work together on the homework, but each student is expected to submit his/her own work. Cheating on a test or project will result in a Failing grade for the course. Please do not cheat
Students with Disabilities
Students with disabilities who believe that they may need accommodations in this class are encouraged to contact the Disability Support Services Office, Doyle Room 26, at 375-2065 as soon as possible to better ensure that such accommodations are implemented in a timely fashion. Documentation from this office is required before accommodations can be made.
Instructor Policies
Attendance
As you can see from the schedule, we will be investigating a new topic at nearly every class. It is critical that you come to class. Students who aren’t in class on a regular basis will not do well. Students are also expected to be on time for class and to be prepared.
Participation
Students are expected to actively participate in class by asking and answering questions.
Preparation
Students are expected to have the reading assignment completed when they arrive at class. While some material is difficult and may need additional explanation, students should have a basic understanding of the concepts that are to be covered that day. Use your notebook to jot down topics/ideas that you don’t understand from the reading and questions that you want to have answered during the next class.
Courtesy
Students are expected to arrive on time and prepared for each class meeting and to refrain from behavior that distracts other students (answering cell phones, text messaging, etc.).
Collaboration
There will be occasions during this course when students will be given the opportunity to work collaboratively with one other student or in a larger group. Collaborative work allows student to learn from each other.
Now that the legal and administrative parts of the class are out of the way it should be noted that this will also be a very fun class. You will be challenged, but you will learn a great deal. This will help you in other finance classes as well as in both your personal financial life as well as in your business life.
Please let me know of any problem you are having--Preferably early in the semester. Tell me in advance of the problem when we can still solve it, not afterwards when it is too late.
University Policy prohibits instructors from assigning a grade of Incomplete (I) to prevent a student from receiving a poor grade in the course. A similar policy applies to withdrawals (W).
Extra-Credit Policy
No opportunities for extra-credit will be given to select students. Otherwise, students who are not given the same opportunity are put at a relative disadvantage.
The first three
weeks of the class will be devoted to making sure we are all on the same
page. This will involve traditional lecture style classes. After
that, there will be a case due every class. So it will definitely be a
busy semester! Many of the cases will require computer
modeling. You are expected to use spreadsheets to solve problems and a
Grades
for case presentations will be both for analysis (write up etc) as well as
presentation. At both the mid semester point and at the end of the year
group members will be allowed to submit grades for others in their group.
Each
group is to evaluate the other group’s analysis. Challenge the analysis,
if necessary, but do so tactfully. Here are some questions to
consider. Were numerical analyses performed properly? Was their
approach reasonable? Why or why not? Were their assumptions
reasonable? Why or why not? Did they overlook important
considerations? Did they emphasis unimportant considerations too much?
Note your participation grade will largely come from this section, so you will
want to be active!
The textbook
contains a CD-ROM with computer spreadsheet templates (MS-Excel format) for
case with significant numerical exhibits to limit your data entry
efforts.
Whether-or-not you
are submitting a given case for a grade, you are
required to have i.) read
the case, ii.) thought about how to approach it, and
iii.) considered possible questions before the
case is being discussed or presented in class. A case course is not
passive in nature. You must be proactive or you will have no hope of
learning what the methods or ideas the cases is
intended to promote. You will have ample incentive to do this since both
the mid-term exam and the final exam will draw on methods and ideas developed
in the cases – whether or not you submitted the case for a formal grade.
Furthermore, this will enable you to participate in class with questions and
insights and will contribute to your grade. To aid in this, each group
will be required to submit a one page memo on what the case is about and offer
some questions for the group(s) presenting.
Your written
projects should be typed, organized, and concise. Allow a reader who has
never seen your work before to quickly understand your approach and navigate
through your paper. Here are some suggestions.
Create Section Headings
Problem Definition.
Do not spend much time summarizing the case; I have read it. But
that said a one page introduction/summary is fine and expected. Refer to
facts in the case, however, to define and frame the problem.
Approach.
Do not start with your analysis with trying to achieve a specific result or
arrive at a specific conclusion. Sell people on your approach and
logic. The conclusions will follow.
Analysis.
This section most likely will include a combination of quantitative and
qualitative analyses. Do not crunch numbers and stop. You must interpret
your results, identify weakness, and take a step back to see the broader
picture. Number crunchers are plentiful. When combined with
insightfulness and systematic thought processes, one adds value in a
multiplicative way.
Conclusion.
Make a recommendation, decision, or conclusion. Explain why you assigned
greater weight to those facts/analyses that support your conclusion than to
facts/analyses that might support another. (Be confident). Present
potential pitfalls or future events, which may subsequently change your
conclusion (Be humble).
Use of Exhibits
Number your exhibits.
When making assertions in your text,
refer to supporting exhibits.
Exhibits should be succinct, perhaps summary in
nature.
Voluminous supporting calculations (such as
sensitivity and scenario analyses) may be presented in an appendix. The
summary output may be presented in an exhibit.
Use graphs when appropriate to illustrate key points.
Do not deliver information overload.
It frustrates and confuses the reader (who will be
grading you).
It signals that the writer is confused.
It will camouflage your meritorious work.
Your presentations
and paper submissions should be professional (not flashy). You will have
30 minutes to present your work during which time you should try to convince
the audience of your approach. Your presentation should be professional.
That is, you should:
have a clear sense of the information you wish to convey
be articulate in your communication
visual aids to assist your audience in gaining the
understanding your analysis
Because your
presentations are true business presentations in the purest sense of the word,
feel free to “teach the class”. That is, feel free to review and/or
develop concepts that are fundamental to your analysis.
(thanks
to Steve Horan for this page of good ideas!)
Week 1 Introduction
Review of valuation
Capital Budgeting, Capital Structure
Week 2 Nexus of contracts and Governance
Corporate Control Market
Week
3
Leasing and Working capital management
Job Market discussion (time to get
serious!) MAY
BE OUT OF CLASS TIME.
Week
4
International Finance and Derivatives recap
Personal finance Class—Guest
lecturer
Week
5
Assessment test and intro to cases, ethics section of book
Week
6
Cases begin: We will be doing one to two cases per class Details
will be announced in class and on blog
Case 1
Case 2
Week
6
Case 3
Case 4
MID TERM BREAK
Week
7
1st half review (assessment test discussion)
Case 5
Week
8
Case 6
Week
9
Case 7
Case 8
Week
10
Case 9
Case 10
Week
11
Case 11
Case 12
Week
12
Case 13
Case 14
Week
13
Case 14
Case 15
Week
14
Case 16
Week 15 Review
Last class