THE UNIVERSITY OF SOUTHERN CALIFORNIA

Marshall School of Business

BUAD 306 – Business Finance – Fall 2008

Section 14784R

TTH 12.00 – 1.50 p.m.

JKP 110

InstructorProfessor Ehud Peleg /

Phone(213) 740-9535

OfficeHOH 817 / E-mail

Office HoursW 2 – 4 p.m.

Course Description and Objective

Finance is a way to think about problems that involve investing, planning and budgeting. This course is designed to acquaint you with the world of finance and to help you understand how finance professionals think and break down components of a financial problem. You will become familiar with vocabulary, understand basic concepts of financial theory, develop computational skills, and be capable of making decisions as investors, managers and financial planners.

Using a lecture and discussion teaching format, this course provides an introductory framework for business finance. Topics covered include: financing business enterprises; time value of money; financial analysis and planning; measurements of risks and rates of return; analysis of sources and uses of debt and equity financing; bond and stock valuation; determination of cost of capital; investment and capital structure decisions for the firm; and international finance.

Most importantly, however, you will become an independent thinker and appreciate your growing confidence to use the process and underlying principles of finance in making decisions in the real world about your own budgets, savings and investments. You will understand the subject of finance at a practical level, be plugged into financial and economic conversations of the day, and deftly readbusiness journal reports and announcements with a critical eye and a deeper understanding.

Required Text

Fundamentals of Corporate Finance, by Ross, Westerfield and Jordan, 8thEdition

Required Materials

1)Financial Calculator (Texas Instruments BAII PLUS preferred)

2) Access to the internet and valid e-mail address (which you will need to access Blackboard)

You are responsible for bringing your financial calculator to all the lectures and the exams. You will be severely disadvantaged if you do not work with a financial calculator during quizzes and exams. My lectures and notes will be based on the Texas Instruments BAII Plus calculator.

I will be using Blackboard ( post announcements and class materials (such as PowerPoint slides). All grades will be distributed through this system. You are responsible for registering your email address with Blackboard so that you can receive your grade. You are responsible for downloading all necessary materials prior to class. You are also responsible for all materials covered and all announcements made in class, regardless of whether you chose to attend class on that particular day.

Registration

If you are currently registered for the class, you must be present at one of the first two class meetings to keep that registration. If you are absent from both, you will be dropped from the class. If you are not registered for the class and wish to be, you should add your name to the sign-up sheet during both of the first two class sessions. After the first week, I will add as many students as possible by random draw from the sign-up sheets to the class.

Evaluation Procedure

Midterm Exam #122%

Midterm Exam #2 22%

Quizzes and Homeworks15%

Class Participation and Attendance 6%

Cumulative Final Exam35%

Midterm and Final Exams

All exams are closed book. You must take your exams in the lecture section in which you are registered. You will be able to prepare your own formula sheet (detailed instructions will be given prior to exams). The formula sheets will not be returned to you. Please make copies beforehand if you would like to keep them as reference. Students must provide their own pencils and scantrons. All exams will use the Scantron multiple choice format.

Any re-grade requests must be submitted in writing within one school week of the distribution of correct answers. Any re-grading will encompass the entire exam.

You are required to be present for all the exams. If you are not able to take the exams on the dates and times specified (as outlined on the last page of this syllabus), you should not take the class. There will be no make-up exams.

Sunglasses, hats, and other headgear are prohibited during exams except for verifiable medical or religious reasons.

There are some legitimate reasons for not showing up for an exam. However, you must provide documentation of any such claim. Police reports and hospital records are fine; a simple note from a doctor is not. If you do provide documentation for missing a midterm exam, your entire grade distribution will be re-weighted as follows: If you miss the first midterm, your second midterm and your final will each be worth 11% more than their original weight (33% and 46% respectively). If you miss the second midterm, your final will be worth 22% more than its original weight (57%). I will not be able to assign a complete grade if you miss both midterms or the final.

Quizzes and Homeworks

There will be 2 types of assignments throughout the semester.

1)Homeworks: You will be assigned homework questions from the book, which you will be required to complete in your own handwriting and hand in at the beginning of class on the due date. We will have a total of 15 homework assignments. They will be graded on a Pass/Fail basis. To pass the homework, you must make a genuine attempt at all of the assigned end-of-chapter problems.

2)In-Class Quizzes: You will be administered quizzes throughout the semester. They will usually take place during the last 15 minutes of class. They will be open book but closed notes. We will have a total of 5 in-class quizzes. They will be graded numerically, with the best possible grade being a 10.

The due dates for the homeworks will be announced in class and on Blackboard. All quizzes/homeworks need to be handwritten in clear handwriting. There will be no make-up quizzes or homeworks. As with exams, you may have legitimate reasons for missing class. Proof of documentation, as defined above, will be required.

We will have a total of 15 homework assignments and 5 in-class quizzes. Not all of these will be graded. I will randomly select which homeworks and which quizzes will be graded. In the end, you will be graded on 15 assignments, which will make up 15% of your grade. Please note that none of these assignments will be returned back to you. Please make copies beforehand if you would like to save them for reference.

Class Participation and Attendance

Class Participation is a measure of a student’s positive impact on the class such as asking intelligent questions or offering insightful opinions during discussions in lectures. We may also have mini group projects in class. Your participation in these will also impact your participation grade.

Finally, regular attendance is strongly advised and I may pass a sign-up sheet or do a roll call on random days. You are responsible for all assignments and all material covered in class in addition to announcements of changes in the reading or changes in the exam schedule. This is true regardless of whether or not you choose to be in class when such assignments or announcements are made.

Practice Problems

In addition to the homework problems, I will post a set of practice problems on Blackboard to help with your studying. The answers will be posted after the homework has been turned in. These will not be graded and do not need to be turned in. They are assigned to help you practice the important concepts.

Institute Policy Regarding Academic Integrity

The use of unauthorized material, communicating with fellow students during an exam, attempting to benefit from the work of another student, allowing another student to benefit from one’s own work, and similar behavior that defeats the intent of an examination or other class work is unacceptable. Examples of academic dishonesty include copying off another student, allowing someone else to copy one’s own work, bringing any written material besides your exam packet to your seat during an exam, and refusing to stop when exam time is called. The minimum penalty for academic dishonesty is to fail the class. The maximum penalty is expulsion from the university.

Institute Policy regarding Disabilities

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure that the letter is delivered to me as early in the semester as possible. DSP is located in STU 301 and is open 8:30am-5:00pm, Tuesday through Friday. The telephone number for DSP is (213) 740-0774.

Classroom Conduct

Please

  • no late arrivals or early departures, unless you make prior arrangements with me
  • no laptops/cell phones/headphones/pagers
  • no long conversations with classmates
  • no sleeping
  • no other type of disruptive behavior that I forgot to mention

Course Disclaimer

This syllabus is an invitation to students to engage in an exciting and interactive study of finance. The intention of BUAD 306 is to provide you with information, offer practice with tools and skill sets, and enhance your capacity to use fundamental concepts to build your repertoire of strategies to make sound decisions. The learning environment is collaborative and supportive; we will learn from one another both in and out of the classroom. To that end, modifications to this syllabus may be warranted as determined by the instructor as the particular learning needs of this class are assessed.

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TENTATIVE COURSE OUTLINE

Lecture # / Date / Chapters / Topic/Assigned Reading
1 / 08/26 / 1 / Introduction to Corporate Finance
2 / 08/28 / 2 / Financial Statements, Taxes, and Cash Flow
3 / 09/02 / 3 / Working with Financial Statements
4 / 09/04 / 5 / The Time Value of Money
5 / 09/09 / 6 / Discounted Cash Flow Valuation
6 / 09/11 / 6 / Discounted Cash Flow Valuation
7 / 09/16 / 7 / Interest Rates and Bond Valuation
8 / 09/18 / 7 / Interest Rates and Bond Valuation
9 / 09/23 / 8 / Stock Valuation
10 / 09/25 / 8 / Stock Valuation
11 / 09/30 / REVIEW / Review for Midterm Exam 1
12 / 10/02 / EXAM / Midterm Exam 1
13 / 10/07 / 9 / Net Present Value and Other Investment Criteria
14 / 10/09 / 10 / Making Capital Investment Decisions
15 / 10/14 / 10 / Making Capital Investment Decisions
16 / 10/16 / 12 / Some Lessons From Capital Market History
17 / 10/21 / 13 / Return, Risk, and the Capital Market Line
18 / 10/23 / 13 / Return, Risk, and the Capital Market Line
19 / 10/28 / 14 / Options and Corporate Finance
20 / 10/30 / 14 / Options and Corporate Finance
21 / 11/04 / REVIEW / Review for Midterm Exam 2
22 / 11/06 / EXAM / Midterm Exam 2
23 / 11/11 / 15 / Cost of Capital
24 / 11/13 / 15 / Cost of Capital
25 / 11/18 / 16 / Raising Capital
26 / 11/20 / 17 / Cost of Capital and Long-Term Financial Policy
27 / 11/25 / 22 / International Corporate Finance
11/27 / Thanksgiving – No Class
28 / 12/02 / 22 / International Corporate Finance
29 / 12/04 / REVIEW / Review for Final Exam
12/16 / EXAM / Final Exam (11.00 a.m. –1.00 p.m.), Room: TBA
Problem Set # / Chapter (Pages) / Homework Problems / Tentative Due Date
1 / 2 (43 – 47) / 1, 2, 8, 14, 18, 22 / 09/02
2 / 3 (82 – 87) / 16, 18, 26, 27, 29, 30 / 09/04
3 / 5 (143 – 145) / 1, 9, 13, 14, 19, 20 / 09/11
4 / 6 (181 – 190) / 3, 6, 9, 10, 14, 21, 32, 42 / 09/16
5 / 7 (229 – 233) / 6, 7, 8, 14, 18, 23 / 09/23
6 / 8 (259 – 261) / 2, 3, 12, 13, 16, 17 / 09/30
7 / 9 (295 – 300) / 3, 6, 9, 12, 13, 16 / 10/14
8 / 10 (331 – 336) / 1, 4, 8, 9, 14, 18, 19 / 10/21
9 / 12 (398 – 401) / 1, 2, 4, 7, 8, 14 / 10/28
10 / 13 (433 – 437) / 10, 11, 17, 23, 24, 26 / 10/30
11 / 14 (473 – 477) / 1, 2, 3, 9, 13, 14 / 11/04
12 / 15 (507 – 511) / 4, 7, 9, 13, 17, 19, 20 / 11/18
13 / 16 (547 – 549) / 1, 2, 3, 5, 6, 7 / 11/25
14 / 17 (585 – 588) / 4, 12, 13, 14, 16, 17 / 12/02
15 / 22 (750 – 753) / 1, 5, 7, 10, 11 / 12/04

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