Business 71a
Introduction to Finance
Spring 2017
Tu/Th 2:00-3:20pm (SECTION 1)
Tu/Th 3:30-4:50pm (SECTION 2)
Room: International Hall, Sachar 116
Associate Professor Daniel Bergstresser.
Office hours on Mondays, 3:30-5:00, or by appointment at
Office location is Sachar 128C
Website: http://people.brandeis.edu/~dberg
Twitter: http://twitter.com/dbergstresser
Teaching Assistants: SECTION 1: Ji (Raymond) Lu (); SECTION 2: Bryan Baratian ()
Prerequisites: Bus 6a or equivalent; Bus 1b is a corequisite. This course may not be taken for credit by students who have previously taken Econ 171a. This course cannot be counted as an elective towards the economics minor or major.
COURSE OBJECTIVES
The primary objective of this course is to develop the financial skills and logical thought processes necessary to make and implement business decisions in a global environment. Upon successful completion of this course, students will have developed an understanding of key concepts of the financial environment within which management must operate, the processes of financial analysis, the time value of money, methods of stock and bond valuation and the relationship of valuation to risk and return. We will look at several basic questions:
· What functions do financial markets provide?
· How do firms use and deal with financial markets to raise capital?
· How do investors approach financial decisions?
· How do we value financial securities like stocks and bonds?
We will analyze how financial managers make decisions within a framework which emphasizes the time value of money and the relationship between expected return and risk. In addition, we will examine the techniques that financial managers use to evaluate feasibility of undertaking new projects (i.e., capital budgeting). Note that this syllabus is preliminary and may change somewhat as the course progresses.
Method of Instruction:
Instruction will be done on the basis of a combination of lectures, discussions, and problem solving. This course is fast paced, reasonably technical in nature, and it requires each student to do considerable out-of-class work. I assign required homework for nearly every class session. Problem solving is very important in this course and I encourage participation from all my students in this activity throughout the term. Answers to most assigned questions will be provided to students. You should read the assigned book chapters prior to coming to class. The material will mean a great deal more to you, and you will understand and retain much more of it, especially when you review the class notes and problems prior to an exam.
COURSE REQUIREMENTS
Course materials
Text:
· Essentials of Corporate Finance, 9th Edition, Ross, Westerfield, Jordan, McGraw-Hill, 2016.
The materials that I will post on LATTE are as important as the required text. Reading current business periodicals, such as the Financial Times or the Wall Street Journal can only help! I will comment on current business happenings as they may relate to course content. A very important benefit of keeping up with current business events is that it may provide you some ammunition with which you can impress career job interviewers.
Cases and Additional Readings: Will be either handed out in class or electronically distributed via LATTE or email.
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Homework Problem Sets: You also be provided with homework practice problems on various topics throughout the course. You should expect to be assigned homework every class session. These problem sets will be due the following class for grading and review.
Homework grading is as follows:
· Check plus: flawless/near-flawless
· Check / Check plus: most work done correctly, but 1-2 significant errors
· Check: Student showed effort, but made several significant errors
· Check minus: not turned in, turned in with significant help from another student (e.g., “cheating”) or no meaningful effort made. Problem sets receiving this grade for reasons other than cheating can be turned in late for credit up to 14 days late, with a maximum late grade of “check”.
I cannot overemphasize the importance of working these problem sets out in detail by yourself. The exam problems are generally modeled on the problems in these problem sets. There is a high correlation between the grades students receive on their homework assignments and the grades they achieve on exams. The most important and most helpful suggestion I can give you for doing well in this course is to do all the assigned questions and problems and then review them so that you are able to do them on the exam. The surest way to do poorly in this course is to not carefully work on these homework assignments. If you have any difficulty in solving the problems, please contact me, the TA or the BUGS tutor for this course.
Success in this four- credit course is based on the expectation that students will spend a minimum of 9 hours of study time per week in preparation for class (readings, papers, discussion sections, preparation for exams, research, etc.).
Class Participation: Class participation is expected of everyone in this course, and class attendance is required. Class participation grade will be on a similar scale to homework grades:
· Check-plus: 2 or more contributions (questions or responses) to a given class session’s discussion
· Check/Check-plus: 1 contribution to a given class session’s discussion
· Check: attendance, but no contribution
· Check minus: unexcused absence. I will provide excused absences to varsity athletes for scheduled competitions. Those must be arranged in advance. I allow students one unexcused absence per term without penalty. Additional absences will deduct from your class participation score.
To facilitate participation, I will ask all students to place a name card on their desks, and that they sit in the same seat every class. I will assign seats after the first week. Perfect attendance but no participation receives a grade of “B-“ towards the overall grade. Each unexcused absence results in a reduction in this grading element. It is your responsibility to ensure that you take an active role in the class. If this is a problem for you, I urge you to talk to me to discuss ways you can make a contribution.
Grading
· Class Participation 15%
· Homework Assignments and Ethics Exercise 25%
· Midterm Exam 20%
· Final Exam (TBD) 40%
The midterm will be for the full class duration, and the final will be a 3 hour exam. The final exam is comprehensive and cumulative. There will be no makeup exam for the midterm. Students with an excused absence from the midterm will split its weight equally between homework assignments and the final exam. You cannot skip the final exam – if you do you will get zero for the final – the weight from the final will not be moved to the other components.
My exams are not open book or open notes. However, you may bring one crib sheet to the midterm exam and two crib sheets to the final exam. A crib sheet is an ordinary (A4 or 8 ½” x 11”) piece of paper, on which you may write, type, print or copy formulas ONLY- no definitions or any other text will be allowed. Writing should be in 10 point font or hand-written equivalent and you may use both sides of the paper. You may not staple or tape any extensions or booklets onto the crib sheet.
Class Format. Classes will be a mixture of lectures introducing new material and discussions of homework solutions
Ethics Exercise. The class will include a partial session and graded individual exercise focused on ethics and business ethics. This is expected to occur around or on the date of the midterm.
Academic Honesty. You are expected to be honest in all of your academic work. Please consult Brandeis University Rights and Responsibilities for all policies and procedures related to academic integrity. Students may be required to submit work to TurnItIn.com software to verify originality. Allegations of alleged academic dishonesty will be forwarded to the Director of Academic Integrity. Sanctions for academic dishonesty can include failing grades and/or suspension from the university. Citation and research assistance can be found at LTS - Library guides. For any work involving historical cases, under no circumstance may you search the internet (or turn to any other outside source) for any information regarding these cases without my permission. Failure to comply with this directive is cheating.
Special Accommodation. If you are a student with a documented disability on record at Brandeis and wish to have a reasonable accommodation made for you in this class, please see me immediately. Please keep in mind that reasonable accommodations are not provided retroactively.
Use of Laptop Computers and Cell Phones in Class:
Cell phones and PDA.s (i.e., Blackberrys, iPhones, etc.) must be turned off during lectures. No laptops in class. Regular class attendance is mandatory and strongly advised if you want to do well in the course. I stick quite closely to my slides and what I discuss in class when setting exam questions. Laptop computers and cellphones may not be used during exams.
Course Film:
All course sessions will be filmed. The resulting film will be made available to students in the course as a resource. Brandeis IBS may also make the resulting film, edited or unedited, more widely available, without limitation. For example, Brandeis IBS may publicly disseminate film material from class sessions, including student comments and participation.
Communication Through Twitter:
Students are encouraged to ask questions via Twitter (#BUS71A). Please follow me (@dbergstresser), and I will hashtag posts related to the course.
COURSE OUTLINE
8/31 Chapter 1 / Introduction to Financial Management
9/5 and 9/7 Chapter 2 / Financial Statements and Cash Flow
9/12 and 9/14 Chapter 3 / Working with Financial Statements
9/19 Chapter 4 / Time Value of Money
9/26 and 9/28 Chapter 5 / Discounted Cash Flow Valuation
10/3 and 10/10 Chapter 6 / Interest Rates and Bond Valuation
10/11 Chapter 7 / Equity Markets and Stock Valuation
10/17 and 10/19 Chapter 8 / Net Present Value and Other Investment Criteria
10/24 MIDTERM EXAM and ETHICS EXERCISE
10/26 and 10/31 Chapter 9 / Making Capital Investment Decisions
11/2 and 11/7 Chapter 10 / Some Lessons from Capital Market History
11/9 and 11/14 Chapter 11 / Risk and Return
11/16 Chapter 12 / Cost of Capital
11/21 Chapter 13 / Leverage and Capital Structure (part 1)
[THANKSGIVING]
11/28 Chapter 13/ Leverage and Capital Structure (part 2)
11/30 Chapter 14/ Dividends and Dividend Policy
12/5 Chapter 15/ Raising Capital
12/7 REVIEW AND SUMMARY
(TBD) FINAL EXAM
Note: Schedule is preliminary and subject to change.
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