BU.231.620.XX – Corporate Finance–Instructor’s Name– Page 1 of 6
I
/Corporate Finance
2 CreditsBU.231.620.XX
[NOTE:Each section must have a separate syllabus.]
[DayTime/ex: Monday, 6pm-9pm]
[StartEnd Dates / ex: 3/24/15-5/12/15]
[Semester / ex: Fall 2016]
[Location / ex: Washington, DC]
Instructor
[Full Name]
Contact Information
[Email Address]
[Phone Number,(###)###-#### (Optional)]
Office Hours
[Please specify the day and time of the 2 hours that will be dedicated to office hours each week. For evening classes, faculty may wish to hold their office hours by phone or email. While faculty are permitted to state “and by appointment,” office hours should not be held exclusively by appointment.]
Required Text(s)Learning Materials
- Berk, J., & DeMarzo. P. (2017). Corporate finance (4th ed.). Pearson.ISBN 9780134083278. (This is the standalone text only.)
Note to Instructor:Optional:The information below is for instructors choosing to use MyFinancelab in the course.
- MyFinanceLab (for homework assignments and practice problems). You can access MyFinanceLab and the text using one of the following options:
- Purchase hardcopy of textbook plus MyFinanceLab with eText
- Purchase eText plus MyFinanceLab access code
- Rent the textbook or eText and purchase MyFinanceLab access code without eText
The options are available on the Pearson website.
- Cases to be announced.(Note to Instructor: Instructors may decide on a suitable case or cases to use.)A link to purchase the assigned cases will be provided on Blackboard.
- Lecture Notes. The lecture notes will be posted on Blackboard.
Course Description
This course is designed to introduce students to the basic, yet fundamental, issues of modern finance. The goal of the course is to provide students with the basic tools needed to successfully complete more advanced finance courses. This course deals primarily with a firm’s investment and financing decisions, and its interactions with the capital markets. Students are taught the fundamental principles of financial valuation and analysis, which provide a solid foundation for all other finance courses.
Prerequisite(s)
BU.210.620 OR BU.910.611 OR BU.234.610
Course Overview
About 90% of total revenues in the U.S. economy are generated by corporations. Understanding decision-making within a corporation, whether it is about the choice of investment or about how to raise capital to finance a specific investment, is fundamentally important to understand the key players in today’s economy. This course provides the tools to understand efficient decision-making within a corporation by employing the notion of absence of arbitrage (i.e., the Law of One Price), namely the fundamental principle shaping all aspects of modern finance. While my goal cannot be to make you expert managers in eight weeks, you will be able to evaluate important corporate decisions coherently within the framework of the no-arbitrage principle.
Finance and Social Responsibility
The effectiveness and perceived integrity of finance have been tested in recent years. Along with preventable excesses and regrettable distortions, financial innovation has, however, always been an effective means for society to achieve its goals, from insurance to consumption to saving. The power of financial innovation as a generator of inclusive prosperity and widespread well-being can (and should be) reclaimed. In this context, optimization of shareholder’s value, for instance, may not be the only metric along which financial success is measured and should be placed, along with other traditional finance metrics, in the broader context of its contribution to society. To this extent, Carey encourages technical, non-ideological, exchanges of ideas leading to a better understanding of the broader role of finance as a force for shared prosperity. The reading (to be announced) provides an initial opportunity for technical discussions of these issues as they relate to the topics covered in Corporate Finance.
Learning Objectives
By the end of this course, students will be able to:
- Price future certain (and uncertain) streams of cash flows.
- Value projects and make capital budgeting decisions using various investment decision rules.
- Evaluate the financial and strategic implications of alternative corporate financing decisions in different environments.
- Relate agency problems to corporate financing and pay-out decisions and their ethical implications.
To view the complete list of Carey Business School’s general learning goals and objectives, visit the Carey website.
Attendance
Class attendance is mandatory. Each student should read the assigned materials and give careful thought to background information prior to each class session. Having done so will not only facilitate class discussion, it will also lighten your workload because the lectures are much easier to follow after the readings have been digested.
Assignments
Note to Instructor:You may modify the number of quizzes and/or type of assignments and their weights (except for the final exam). You may also rewrite the notes related to the quizzes and the assignments as you see fit.Below is a sample.
Course grades will be based on problem sets, case assignments, a midterm exam, and a final exam.
Assignment / Learning Objectives / WeightHomework problem sets on MyFinanceLab / 1–4 / 10%
Case assignments / 1–4 / 15%
Midterm exam / 1–4 / 25%
Final exam (comprehensive) / 1–4 / 50%
Total / 100%
Homeworkproblem sets on MyFinanceLab will be assigned each week and are due by a specified date. Failure to submit the homework by the specified due date indicated in MyFinanceLab will result in a zero score for the assignment. Students are to work independently on the problem sets and have up to 3 attempts at the assigned problem sets before the specified due date. Students are strongly encouraged to do the problem sets to prepare for the midterm and final exams.
Cases assignments. Students are to form groups of no more than 4 students to work on the case assignments. Details of the case assignments will be provided on Blackboard.
Exams. The midterm exam will be about 1 hour long and the comprehensive final exam will be about 3 hours long. Both exams will be closed-book.
Grading
Effective Fall 2017: The grade of A is reserved for those who demonstrate extraordinarily excellent performance as determined by the instructor. The grade of A- is awarded only for excellent performance. The grades of B+, B, and B- are awarded for good performance. The grades of C+, C, and C- are awarded for adequate but substandard performance.The grades of D+, D, and D- are not awarded at the graduate level (undergraduate only). The grade of F indicates the student’s failure to satisfactorily complete the course work.
Please note that for Core and Foundation courses, a maximum of 25% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.3. For Elective courses, a maximum of 35% of students may be awarded an A or A-; the grade point average of the class should not exceed 3.4. (For classes with 15 students or fewer, the class GPA cap is waived.)
Tentative Course Calendar
The instructors reserve the right to alter course content and/or adjust the pace to accommodate class progress. Students are responsible for keeping up with all adjustments to the course calendar.
Pre-course readings: Chapters 1 and 2 of Berk and DeMarzo. If you cannot read these chapters for the first class, it is important that you do so for the second class.
TBA = to be assigned.
Note to Instructor:You may change the number of quizzes and insert one or more case assignments into the course calendar as you see fit.
Week / Content / Reading1 /
- Course introduction and overview
- Valuing cash flows
- Net present values
Chapters 3, 4, and 5
2 /
- Valuing projects (I)
- Investment decisions rules
- Fundamentals of capital budgeting
Case 1 (TBA) preview
3 /
- Risk and return
- Systematic versus idiosyncratic risk
- Evaluating the cost of capital
4 /
- Capital structure (I)
- Debt and equity financing
- Modigliani-Miller
5 /
- Capital structure (II)
- Debt and taxes
- The cost of bankruptcy
- Optimal capital structure: the trade-off theory
- Agency costs: time-permitting
Case 2 (TBA) preview
6 /
- Capital structure (III)
- Pay-out policy
7 /
- Valuing projects (II)
- More on capital budgeting (with leverage and market imperfections
8 / Final Exam
BU.231.620.XX – Corporate Finance–Instructor’s Name– Page 1 of 6
Carey Business School
Policies and General Information
Blackboard Site
A Blackboard course site is set up for this course. Each student is expected to check the site throughout the semester as Blackboard will be the primary venue for outside classroom communications between the instructors and the students. Students can access the course site at Support for Blackboard is available at 1-866-669-6138.
Course Evaluation
As a research and learning community, the Carey Business School is committed to continuous improvement. The faculty strongly encourages students to provide complete and honest feedback for this course. Please take this activity seriously; we depend on your feedback to help us improve. Information on how to complete the evaluation will be provided toward the end of the course.
Disability Support Services
All students with disabilities who require accommodations for this course should contact Disability Support Services at their earliest convenience to discuss their specific needs. If you have a documented disability, you must be registered with Disability Support Services ( or 410-234-9243) to receive accommodations. For more information, please visit the Disability Support Services webpage.
Academic Ethics Policy
Carey expects graduates to be innovative business leaders and exemplary global citizens. The Carey community believes that honesty, integrity, and community responsibility are qualities inherent in an exemplary citizen. The objective of the Academic Ethics Policy (AEP) is to create an environment of trust and respect among all members of the Carey academic community and hold Carey students accountable to the highest standards of academic integrity and excellence.
It is the responsibility of every Carey student, faculty member, and staff member to familiarize themselves with the AEP and its procedures. Failure to become acquainted with this information will not excuse any student, faculty, or staff from the responsibility to abide by the AEP. Please contact the Student Services office if you have any questions. For the full policy, please visit the Academic Ethics Policy webpage.
Students are not allowed to use any electronic devices during in-class tests. Calculators will be provided if the instructor requires them for test taking. Students must seek permission from the instructor to leave the classroom during an in-class test. Test scripts must not be removed from the classroom during the test.
Student Conduct Code
The fundamental purpose of the Johns Hopkins University’s regulation of student conduct is to promote and to protect the health, safety, welfare, property, and rights of all members of the University community as well as to promote the orderly operation of the University and to safeguard its property and facilities. As members of the University community, students accept certain responsibilities which support the educational mission and create an environment in which all students are afforded the same opportunity to succeed academically. Please contact the Student Services office if you have any questions. For the full policy, please visit the Student Conduct Code webpage.
Student Success Center
The Student Success Center offers free online and in-person one-on-one and group coaching in writing, presenting, and quantitative courses. The center also offers a variety of workshops, exam study sessions, and instructor-led primer seminars to help prepare students for challenging course content, including statistics and accounting. For more information or to book an appointment, please visit the Student Success Center website.
Other Important Academic Policies and Services
Students are strongly encouraged to consult the Carey Business School’s Student Handbook and Academic Catalog and Student Resources for information regarding the following items:
- Statement of Diversity and Inclusion
- Inclement Weather Policy
Copyright Statement
Unless explicitly allowed by the instructor, course materials, class discussions, and examinations are created for and expected to be used by class participants only.The recording and rebroadcasting of such material, by any means, is forbidden. Violations are subject to sanctions under the Honor Code.