Syllabus – Principles of Finance 350
SHELDON B. LUBAR SCHOOL OF BUSINESS
University of Wisconsin – Milwaukee
Lecture 404 is Tues/Thurs 9:00-9:50 AM (26971) in Lubar Hall N140
Lecture 405 is Tues/Thurs 1:00-1:50 PM (26972) in Lubar Hall N140
Fall Semester 2016, 3 credits
INSTRUCTOR: Richard D. Marcus, Ph.D.is an Associate Professor of Business and the Chair of the LSB Executive Committee
OFFICE: S430F in Lubar Hall. My mailbox is also on the fourth floor of Lubar Hall
OFFICE HOURS: Tuesdays from 10:00AM – 11:15AM and Thursdays from 11:45AM to 1:00PM in Lubar Hall S430F and by appointment.
TELEPHONE: 414-229-4103 (office) or 414-228-7731 (home) or 414-510-7731 (cell)
E-mail: marcus@uwm.edu. When sending me an email about Finance 350, please write “Finance 350” in the subject line.
HOMEPAGE: https://sites.uwm.edu/marcus
PRINCIPLES OF FINANCE 350: Examines the fundamentals of financial management, asset/liability valuations, risk and return, investment analysis, sources and uses of funds, cost of capital, and cash management. Prerequisites are soph st; Econ 103(P) & 104(P); Bus Adm 201(P) or 207(P); Bus Adm 210(P) or 211(P).
TEXTBOOK and CONNECT FINANCE: Go to D2L and select along the navigation line,McGraw-Hill Campus. This is a direct way (and the cheapest way) to get the electronic book with Connect homework assignments, and LearnSmart for $100. If you have used McGraw-Hill for other books for other classes, use that to logon. If not, give your email and select a password. It is possible to logon for 2 weeks without paying, or just buy it there. Two other ways to access our book is to go to e-Campus, where for $157.14 you can buy the 16-digit code to access the electronic book, Connect, and LearnSmart as well as get a looseleaf paper copy that will be mailed to you in 2 days. The third way is to go through McGraw-Hill for the code and the looseleaf book, which I will make clearer later. LearnSmart earns you 140 points in this class. Repeated, convincing studies of students who used LearnSmart have shown significantly higher scores on midterms, finals, and understanding of finance than those that did not use LearnSmart.
REQUIRED MATERIAL FOR FINANCE 350: McGraw-Hill electronic textbook with LearnSmart and Connect. Also needed is a fiancial calculator. See more on this below.
SUPPORT AND TIPS FOR CONNECT: If you have any issues while registering or using Connect, please contact the Care Team for McGraw-Hill through http://www.mhhe.com/support. They have a good team for a chat session or you may call them at 1-800-331-5094. Our course examines Chapters 1-14. To avoid problems related to unexpected technical issues, you are advised not to wait until the last moment to complete assignments.
FINANCIAL CALCULATOR: You will need a financial calculator of your own choosing. My recommendation is Texas Instruments BAII Plus or the professional version. The textbook is designed for use of either HP-10B or TI BA II Plus Financial Calculators. Either the TI or HP is fine with me. Most APPS for smart phones include some financial calculator functions, but few of the free APPS have all that is needed for bond analysis, such as IRR and uneven cash flows. It is possible to purchase a BA II Plus App for $14.99 on iTunes. For even less, can use 10bii Financial Calculators for $5.99 from i-Tunes or Android, or Vicinno FinCalc Pro for $1.99 for i-Tunes and Android. If you plan on being a Finance Major, I suggest that you get a physical (non-cell phone) calculator, as other classes will not permit use of a cell phone, but I do permit cell phones in my class. BYC means Bring Your Calculator!
ROSS, WESTERFIELD, and JORDAN BLOG: Problems in Greece, Puerto Rico, or the implications of changes in capital gains taxes and how they impact the stock market are discussed. Our authors have a semi-active blog.http://essentialsofcorporatefinance.blogspot.com/
POINTS FOR MIDTERMS, FINALS, HOMEWORK ASSIGNMENTS, and LEARNSMART WORK: There will be two midterm examinations and one final. Each midterm exam is worth 80 of 445 total points in the class. We will also have homework assignments that will constitute 45 of 175 of the points that are completed on Connect Finance from McGraw-Hill. The Final is worth 100 points (50 questions, but we have 2 hours). LearnSmart is worth 10 points per chapter or 140 points.
MIDTERMS and FINAL EXAM DATES: The midterms for 350 are both held in class. The first midterm is on Tuesday, October 4 in class and covers Chapters 1-5 for 80 points (40 questions worth 2 points each per multiple choice question). The second midterm is on Thursday, November 10 in class and covers Chapters 6-10 for 80 points (40 questions). The final is combined and is on Tuesday, December 20 at 5:30-7:30 PM. The final covers Chapters 11-14, which are 50 questions for 100 points. Professor Marcus provides a list of key financial formulas attached to the midterms and finals. Students will bring their own financial calculator to the exams.
FINANCE CONNECT ASSIGNMENTS: There are 14 assignments (9 are graded and there are 5 that are ungraded). Each of the nine graded assignments is worth 5 points for a total of 45 points out of 175. The questions typically are algorithmic so that each student gets different numbers to essentially the same problems, but with different answers. The assignments have unlimited number of attempts to retake up to the suggested due dates listed in the “Daily Schedule of Lectures, Discussion Sections, and Connect Assignments” appearing below. There are absolute due dates in the syllabus of October 8 for LearnSmart and Connect Assignments up to the first midterm; November 16 for LearnSmart and Assignments through Midterm 2; and December 20 for the last third of the class. There is no penalty for retaking the assignment. I permit (and encourage you) to print assignment, but you must enter your answers on the website. Your scores for assignments after their due dates are put into your D2L gradesheet.
LEARNSMART ASSIGNMENTS: There are 14 LearnSmart Assignments, each take 20 minutes to complete, each is worth 10 points, for a total of 140 points. Hence, LearnSmart and Chapter assignments account (185/445) for about 42% of the total points and the Midterms and Final account for 58%, the rest of the points (260/445).
FINAL EXAM: Lecture 405 is on Tuesday, December 20 at 7:30-9:30 PM, which is a combined final of Lectures 404 and 405. The final covers Chapters 11-14 for 100 points out of 445 possible in the course. The final has more time available, permitting a slightly longer exam than the midterms with 50 questions.
GRADES: Grades will be based on the total points earned on midterm 1, midterm 2, the final, and the scores received on the graded assignments in CONNECT FINANCE and LearnSmart. A total of 445 is the maximum possible points for the semester. There are no “extra credit” points available. Typically, students who amass points at (or above) the median score will be considered for earning a B or better. Those who are in the lower half will be considered for scores of B- or lower. Scores will be posted on Desire2Learn at: http://d2l.uwm.edu/.
Weekly Time Expectations: There are three hours per week of lectures and discussion. Reading the chapters using LearnSmart and doing the Connect Assignments takes 2 hours per week for typical chapters, but will take longer for more complex chapters.
TEACHING ASSISTANT, EMAIL, DISCUSSION SECTIONS: We have two outstanding Teaching Assistants, Olivia Nitke (E-mail: ohnitke@uwm.edu) and Junyong Kim (E-mail:junyong@uwm.edu). Junyong is TA for Discussions 601 through 605 and Olivia Nitke is the TA for Discussions 606-610.
TA OFFICE, PHONE NUMBER, and OFFICE HOURS: Olivia Nitke and Junyong share office S445 in Lubar Hall. Their common office phone number is 414-229-6337. Olivia’s office hours each week are on Tuesdays from 2-4 PM and Junyong’s office hours are on Thursdays from from 2-4 PM. You may see either TA, even if one TA is not your assigned discussion leader.
CLASSROOM POLICIES: UWM has long-standing policies on academic misconduct, sexual harassment, discrimination, adding, dropping, withdrawal, repeating classes, and changes of grade. These policies are available at: https://pantherfile.uwm.edu/marcus/www/policies.html.
Lecture #1 on Tuesday, September 6: Chapter 1- Introduction to Financial Management
Lecture #2 is on Thursday, September 8: Chapter 2 – Financial Statements, Taxes, and Cash Flows.
Discussion 1 is on Friday, September 9: Meet your TA, See a Demo and Intro to Connect Finance, LearnSmart, and class D2L links to Facebook and Twitter for UWMFinance350.
Tuesday, September 13: Suggested due date for the first Finance Connect assignment. This assignment is ungraded from Chapter 1 to get you ready to use Connect Finance and LearnSmart. This is also the suggested due date for LearnSmart Chapter 1.
WEEK 2: Lecture #3 on Tuesday, September 13: Chapter 2 (continued) – More on CFFA or Cash Flow From Assets
Lecture #4 on Thursday, September 15 Chapter 3 – Working with Financial Statements (emphasis on ratio analysis).
Discussion 2: Friday, September 16: OCF and CFFA problems (especially problems 19-21 on Belyk Paving and Titan Football, pages 45-46).
Tuesday, September 20: Suggested due date for the second assignment Finance Connect assignment from Chapters 2. This assignment is graded, but you have multiple times to take it before the deadline. This is also the suggested due date for LearnSmart Chapter 2.
WEEK 3:Lecture #5 on Tuesday, September 20 Chapter 3 (continued) – Using the Du Pont Identity
Lecture #6 on Thursday, September 22: Chapter 4 Introduction to Valuation (BYC = Bring Your Calculator!)
Discussion 3: Friday, September 23: TAT (Turnover Measures reviewed from pages 59 to 61 and problem 22 on page 89) and Du Pont Identity questions such as 3.7 on page 85.
Tuesday, September 27: Suggested due date for the third Finance Connect assignment from Chapter 3 and the early parts of Chapter 4. This assignment is graded. This is also the suggested due date for LearnSmart Chapter 3.
WEEK 4:Lecture #7 on Tuesday, September 27: Chapter 5 – Discounted Cash Flow Valuation (BYC)
Lecture #8 on Thursday, October 4: Chapter 5 (continued) – Effective Annual Rates (EARs), Perpetuities, Midterm 1 Overview.
Discussion 4: Friday, September 30: TVM (Time Value of Money) from end of Chapter 4 using your financial calculator – BYC (bring your calculator!) HINT: Do all the worked problems on page 620-622 (textbook Appendix D) for TI BA II Calculators and HP-10B Calculators.
Tuesday, October 4 is also the suggested due date for the fourth Finance Connect ungradedassignment based on Chapters 4 and 5, which is a great review also for Midterm 1.
WEEK 5:Tuesday, October 4: is our MIDTERM #1 in classroom N140 during our regular class period and BYC! Midterm 1 covers Chapters 1-5. Lecture #9 on Thursday, October : Chapter 6 – Interest Rates and Bond Valuation
Discussion 5: Friday, October 6: Return of Midterm #1 if available and answers to midterm’s most frequently missed questions and “The Five Keys to Bond Valuation.”
Saturday, October 8 at midnight: Abosolute Final Due Date for All LearnSmart Chapters 1-5 and Assignments #2 and #3.
Tuesday, October 11, no Connect Assignment due. Suggested due date for LearnSmart Chapter 6.
WEEK 6:Lecture #10 on Tuesday, October 11: Chapter 6 (continued) – Bond Features, Bond Types, and Yield Curves Lecture #11 on Thursday, October 13: Chapter 7 – Equity Markets and Stock Valuation
Discussion 6: Friday, October 21: DGM – The Dividend Growth Model and selected problems from Questions and Problems of 15-21 on pages 231-232.
Tuesday, October 18: Suggested due date for fifth Finance Connect assignment from Chapter 6. This assignment is graded. This is also the suggested due date for LearnSmart for Chapter 6.
WEEK 7: Lecture #12 on Tuesday, October 18: Chapter 7 (continued) – Preferred Stocks, Primary Markets, and Secondary Markets for Equities Lecture #13 on Thursday, October 20:Chapter 8 – NPV is Net Present Value and IRR is Internal Rate of Return
Discussion 7: Friday, October 21: Finding NVP and IRR using Excel and on calculators, and selected problems 1-15 on pages 265-267.
Tuesday, October 25: Suggested due date for sixth assignment from Finance Connect from Chapter 7. This assignment is graded. This is also the suggested due date for LearnSmart Chapter 7.
WEEK 8: Lecture #14 on Tuesday, October 25: Chapter 8 (continued) – Capital Budgeting and Capital Rationing
Lecture #15 on Thursday, October 27 Chapter 9 – Making Investment Decisions
Discussion 8: Friday, October 28: Calculating project Operating Cash Flows (OCF) examples such as #5 and #8 on page 303 and 9.1 on page 301.
Tuesday, November 1: Due date for seventh Finance Connect assignment based on Chapter 8. This assignment is graded. This is also the suggested due date for LearnSmart Chapter 8.
WEEK 9: Lecture #16 on Tuesday, November 1 Chapter 9 (continued) – Sensitivity Analysis of Capital Projects and Managerial Options
Lecture #17 on Thursday, November 3 Chapter 10 – Lessons from Capital Market History
Discussion 9: Friday, November 4: What is the difference between a sample standard deviation and a population standard deviation, and doing examples.
Tuesday, November 8: Suggested due date for eighth Finance Connect assignment based on Chapter 9. This assignment is graded. This is also the suggested due date for LearnSmart Chapter 9.
WEEK 10:Lecture #18 on Tuesday, November 8 Chapter 10 (continued) Capital Market Efficiency and Midterm #2 overview
Thursday, November 10: is our MIDTERM #2 in classroom N140 during our regualar classroom periods and BYC! Midterm 2 covers Chapters 6-10.
Discussion 10: Friday, November 11: Arithmetic versus Geometric Returns and selected problems from pages 342-345
Tuesday, November 15: Suggested due date for the ninth Connect Assignment due on Chapter 10. This assignment is ungraded. Suggested due date also for LearnSmart Chapter 10 and good practice for Midterm #2.
WEEK 11:Lecture #19 on Tuesday, November 15: Chapter 11 – Risk and Return
Lecture #20 on Thursday, November 17: Chapter 11 (continued) – The Security Market Line and CAPM (The Capital Asset Pricing Model)
Wednesday, November 16 at midnight: Abosolute Final Due Date for All LearnSmart Chapters 6-10 and Graded Assignments #6, #7, and #8.
Discussion 11: Friday, November 11: Return of Midterm 2 (if available) and review of population and sample standard deviations as measures of risk and variability and selected problems 1-13 from pages 380-382.
Tuesday, November 22: Suggested due date for the tenth Finance Connect assignment from Chapter 11. This assignment is graded. Suggested due date also for LearnSmart Chapter 11.
THANKSGIVING WEEK 12: Lecture #21 on Tuesday, November 22: Chapter 12 – The Cost of Capital
Thursday, November 24: is Thanksgiving. Watch a parade on TV, eat some turkey, but sadly there is no Thanksgiving Day Packer game until Monday Night Football, Nov 28, as the Packer’s cook up some Philalephia Eagles for dinner.
Friday, November 25, there is no discussion. The University is closed.
Tuesday, November 29: If you didn’t do Chapter 11’s LearnSmart or Assignment #10, use this as an alternative suggested due date.
WEEK 13:Lecture #22 on Tuesday, November 29: Chapter 12 (continued) – Some methods for finding the cost of capital for projects not similar to the whole firm.
Lecture #23 on Thursday, December 1: Lecture #24 on Tuesday, December 6: Chapter 13 – Begin: Leverage and Capital Structure
Discussion 12: Friday, December 2: How to estimate beta, a review of the WACC, Texas Style (Table 12.1 on page 401), and selected problems at the end of the chapter.
Tuesday, December 6: Due date for the eleventh Finance Connect assignment from Chapter 12. This assignment is ungraded. Suggested due date also for LearnSmart Chapter 12.
WEEK 14: Lecture #24 on Tuesday, December 6: Chapter 13 (continued) – Is there an Optimal Capital Structure?
Lecture #25 on Thursday, December 8: Chapter 14 – Dividends and Dividend Policy.
Discussion 13: Friday, December 9: Workout versus a Bankruptcy and selected problems from page end of Chapter 13 and 14.
Tuesday, December 13: Due date for the twelfth Finance Connect assignment from Chapter 13. This assignment is graded. Suggested due date also for LearnSmart Chapter 13.
A Short WEEK 15: Lecture #26 on Tuesday, December 13: Chapter 14 (continuted) – Stock Repurchase, Stock Splits, Reverse Stock Splits, DRIPs and FRIPs and an overview of the Final.
Wednesday, December 14: Unviersity Study Day.
Thursday onward finals week begins.
Tuesday, December 20: Due date for Thirteenth Finance Connect assignment from Chapter 14. This assignment is graded. Final due date for Assignments #10, #11, #12, and #13, as well as Learnsmart Chapters 11-14.
FINAL’S WEEK 16:
Tuesday, December 20: is our COMBINED 404 and 405 LECTURE FINAL in classroom that will be announced the prior week and printed in the handout for week 15. It will be 7:30 – 9:30 PM. Remember to BYC! The Final covers Chapters 11-14.
Scores and grades will be posted on D2L at http://d2l.uwm.edu/ and an email notice will be sent when grades have been reported on PAWS.