BU.910.611.XX– Financial Resources Part II – Yuval Bar-Or– Page 1 of 5
/Financial Resources Part II
2 CreditsBU.910.611.XX
[NOTE: Each section must have a separate syllabus.]
[Day &Time / ex: Monday, 6pm-9pm]
[Start & End Dates / ex: 3/24/17–5/12/17]
[Semester / ex: Spring 2017]
[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. and P. DeMarzo. 2017. Corporate Finance. (4th Ed. ISBN 9780134083278). Pearson (This is the standalone text only.)
- Case study: “Astral Records LTD., North America: Some financial concerns.” Darden Business Publishing, UV0076, Version 1.5.
- Lecture Notes. The lecture notes will be posted on Blackboard.
- Damodaran, A. (2017) Some thoughts on the risk free rate and how it can be measured.
- Gustke, C. (2017, June 16). The truth is finally starting to emerge about socially responsible investing. CNBC. Retrieved from Historically, the argument against socially responsible investing focused on the idea that socially responsible investing (SRI) yields less diversification and lower returns than non-SRI (conventional) investing. This article argues that is not the case, providing more support for the pro-SRI camp.
Course Description
This Part 2 course studies corporate finance and capital markets, emphasizing the financial aspects of managerial decisions. The course touches on all areas of finance, including the valuation of real and financial assets, risk management and financial derivatives, the trade-off between risk and expected return, and corporate financing and dividend policy. The course draws heavily on empirical research to help guide managerial decisions.
Prerequisites
None
Course Overview
The course provides the analytical tools and financial theories needed to implement sound financial decisions within a corporation (and outside of a corporation). Ideas are presented in a cohesive way within the framework of the no-arbitrage principle, the fundamental principle shaping all aspects of modern finance. Command of the subject is crucially important for anyone considering a career in corporate management, consulting, investment banking, or trading.
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 (Gustke 2017) provides an opportunity for 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 income.
- Use valuation methods effectively when making capital-budgeting decisions.
- Recognize the financial and strategic implications of alternative corporate financing decisions in different environments.
- Understand the relationship between risk and return and how this relationship impacts valuation methods and investment decisions.
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
Course grades will be based on one midterm, homework assignments, and a final exam. All tests will be closed-book.
Assignment / Learning Objectives / WeightMidterm / 1–5 / 30%
Homework / 1–5 / 20%
Final exam / 1–5 / 50%
Total / 100%
Homework assignments will be given each week and will be due at the beginning of the next class. E.g., HW 1 will be due at the beginning of the second class, HW 2 due at beginning of third class, etc. You can work on these in groups (maximum 3 people) but you do not have to do so. If submitting as a group, all member names must be clearly displayed on the first page. Only one member of the group should submit the assignment to Blackboard. All group members must be in the same cohort.
The assignments will be graded 2 points (turned in and exhibiting significant effort), 1 point (turned in and exhibiting low to medium level of effort), and 0 points (not turned in or very poor effort made).
Note: The assignments don’t need to be written in a formal fashion. The key is to show your work clearly and to be able to establish that you made an effort.
The midterm exam will be 1 hour long. The final exam will be 2 hours long. Both will be closed-book. A formula sheet will be provided by the instructor.
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.
Week / Content / Reading1 / Valuing Investment Opportunities
(1)Valuing cash flows
(2)Net present values
(3)Annuities and Perpetuities / Chapters 3, 4, (and 5)
2 / Valuing Projects and Firms
(1)Investment decision rules
(2)Fundamentals of capital budgeting / Chapters 7, 8.1-8.3
3 / Risk and Return
(1)Capital markets and pricing of risk
(2)Optimal portfolio choice and the CAPM / Chapters 10, 11,
4 / Estimating the Cost of Capital
Midterm / Chapters 12, (and 13)
5 / Capital Structure Theory in Perfect Markets (without frictions)
(1)Capital structure: debt and equity financing
(2)The Modigliani-Miller propositions / Chapter 14
6 / Capital Structure Theory with Frictions
(1)Debt and taxes
(2)The WACC
(3)The cost of bankruptcy
(4)Optimal capital structure: the trade-off theory / Chapters 15 and 16
7 / Capital Budgeting and Valuation with Leverage / Chapter 18
8 / Final
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.