Financial Management (251.301.007) (251.301.007) Spring 2014, SNU-CBA Undergraduate
Kuan-Hui Lee Associate Professor College of Business, Seoul National University http://hosting01.snu.ac.kr/~kuanlee/ http://hosting01.snu.ac.kr/~kuanlee/ Office LG-703 Phone 6924 [email protected]
(best way to contact me) Email Class Time 3:30PM-6:00PM, Tuesday Class Room SK-120 Office Hours By appointment Class Web http://biz.snu.ac.kr/intranet/ (intranet) http://biz.snu.ac.kr/intranet/ Teaching Assistant: Joohun Lee ([email protected]
This course provides the students with the fundamental principles of finance and their applications. The topics include time value of money, risk and return tradeoff, pricing of bonds and equity, capital budgeting, and market efficiency. This course uses a combination of assignments, classroom lectures le ctures and discussions to convey the material. Each student is expected to contribute regularly to classroom discussion. A list of planned topics and materials by class session is presented below (in the Course Schedule). Before each exam, I may have a review session that most students find very helpful.
Course resources Main textbook (required):
Richard A. Brealey, Stewart C. Myers, and Alan J. Marcus Fundamentals of Corporate Finance (7th ed., McGraw-Hill).
Other helpful texts (not required):
Richard A. Brealey and Stewart C. Myers Principles of Corporate Finance (6th ed., McGraw-Hill). Richard A. Brealey, Stewart C. Myers, and Franklin Allen Principles of Corporate Finance (Concise edition, 1st ed., McGraw-Hill). Ivo Welch Corporate Finance – An Introduction (Prentice Hall) Robert Parrino and David Kidwell Fundamentals of Corporate Finance (Wiley)
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Mid-Term Exam: Exam: Final Exam: Homework #1, #2: #2: Market watch watch presentations presentations (Team (Team Project): Project): Individual class class participation: participation:
200 400 100 (=50 x 2) 2) 100 100 900
Exams Make sure you need to bring your ID and calculator. During the exam, your cell phone and notebook computers should be turned off. Absence from the exams will not be excused, except for the most serious circumstances. Such circumstances must be validated in writing by an appropriately accredited professional (e.g. medical doctor, police officer). Remember that joining Wonder-girls concert cannot be a reason to miss the exam. No make-up exams will be given (no exceptions).
Homeworks All individual students are required to submit two separate reports for the two books below. The list of books will be updated during the semester. Verbatim copy of homework is strictly prohibited and if such activity is detected, the student will receive the failure grade for this course . Readings for for homeworks: homeworks: TBA
Team Projects You have to form a team of five to seven students for the team p projects. rojects. In order to prevent free-rider problems, I offer each group the possibility request the exclusion of a particular student from their from group by submitting a written petition alongto with suppo supportive rtive documentation. If I find after reviewing the case that the complaint is justified, I drop the particular student from the group. Dropped student will get zero point for all team-related projects. Market Watch Watch Any team who presents the summary of news ne ws in the class would get points per each presentation. The topic can be anything an ything if it is related to financial economics. Resources are p plentiful lentiful (e.g. Wall Street Journal, Financial Times, CNN, Morningstar, Economist, Businessweek, etc). Topics are on a firstcome-first-serve basis and no two groups will be allowed to present on the same topic. If you want to present, you need to email me to secure your topic. At least one day before the presentation, you need to send the TA your slides and the article itself or its source. The presentation is for 15 minutes at the beginning of class.
Individual class participation Any activity that hampers class atmosphere will result in zero point p oint for individual class participation. I will not allow: 1) turning on laptop during d uring the class, 2) making noises (private talking), 3) reading readin g materials that are not related to class, 4) going-out and coming-in during the class, 5) and any other activity that violates honor code.
Academic Misconduct It causes failing the course and triggers quite unpleasant unple asant university-mandated procedures which result in further sanctions. Academic misconduct includes, but is not limited to, giving or receiving information during an exam and submitting plagiarized work for academic requirements.
Course schedule Each class period includes required readings from the textbook and other resources. Exam dates are fixed. However, the dates and the topics in the course outline are approximate and could and could be subject subject to change. change.
Week 1 Course Overview; The Corporation and the Financial Manager Reading: Chapter 1 (BMM) Problem Sets: 2, 3, 4 Week 1, 2 Accountin Accounting Finance Finance Reading: g and Chapter 3 (BMM) Problem Sets: 1, 3, 5, 18, 19, 23 Due: Submission of Team member list
Time Value of Money; Valuation of Bonds and Stocks
Week 2, 3 The Time Value of Money; Present Value (PV); Future Value (FV); Cash Flows; Inflation Reading: Chapter 5 (BMM) Problem Sets: 1, 2, 7, 13, 15, 38, 52, 64, 72, 73 Week 3, 4
Valuing Bonds; Yield to Maturity; Interest Rate Risk; Default Risk; Yield Curve Reading: Chapter 6 (BMM) Problem Sets: 1, 2, 9, 16, 21, 25 Week 5 Valuing Stocks; Stock and Stock Markets; Dividend Discount Model Reading: Chapter 7 (BMM) Problem Sets: 1, 2, 6, 8, 11, 20, 21, 30
III. Investment Decision; Valuation of Investment Projects Week 6 Net Present Present Value (NPV); (NPV); Internal Rate Rate of Return Return (IRR); (IRR); Other Criteria Criteria Reading: Chapter 8 (BMM) Problem Sets: 11, 13, 15, 22, 28 Week 7 Discounted Cash Flow (DCF) Analysis; Analysis; Review Review Session Session Reading: Sets: Chapter (BMM) Problem 2, 3, 15,918, 19, 28 Due: Homework #1 Week 8
Midterm Exam Week: Exam
Week 9 Project Analysis; Analysis; Capital Capital Budgeting Budgeting Reading: Chapter 10 (BMM) Problem Sets: 6, 9, 10, 11, 16, 20, 23, 27
IV. Risk, Returns, and the Opportunity Cost of Capital Week 10 Risk and Returns; Returns; Diversification; Diversification; CAPM; Opportunity Opportunity Cost Cost of Capital Reading: Chapter 11, 12 (BMM) Problem Sets: 3, 9, 12, 17 (Ch.11) 1, 6, 11, 18, 29, 30 (Ch.12) Week 11 Weighted Average Cost of Capital (WACC) Reading: Chapter 13 (BMM) Problem Sets: 1, 2, 3, 4, 5, 10, 11, 14, 16, 21
Capital Structure; Financing; Distribution 4
Week 12 Initial Public Public Offering Offering (IPO); Seasoned Seasoned Equity Equity Offering Offering (SEO) Reading: Chapter 14 (BMM) Week 13 Debt Financing; Financing; Capital Capital Structure Reading:
Chapter 15 (BMM)
Week 14 Payout Policy; Policy; Dividend Dividend Payment; Stock Repurchase Repurchasess Reading: Chapter 16 (BMM) Due: Homework #2 Week 15 Review Session Session Week 16
Final Exam Exam