Principles of Finance 350

Syllabus

SHELDON B. LUBAR SCHOOL OF BUSINESS

Lecture 401 is Tues/Thurs 11:00 AM - 12:15 PM (32407) in Lubar Hall S185

Spring Semester 2014, 3 credits


INSTRUCTOR: Richard D. Marcus, Ph.D.is an Associate Professor of Business and the Chair of the LSB Executive Committee

OFFICE: S430F in Lubar Hall. My mailbox is also on the fourth floor of Lubar Hall

OFFICE HOURS: Tuesdays from 3:30 to 5PM and Thursdays from 12:15-1PM in Lubar Hall S430F and by appointment.

TELEPHONE: 414-229-4103 (office) or 414-228-7731 (home)

E-mail: marcus@uwm.edu

HOMEPAGE: https://pantherfile.uwm.edu/marcus/www/

PRINCIPLES OF FINANCE 350: Examines the fundamentals of financial management, asset/liability valuations, risk and return, investment analysis, sources and uses of funds, cost of capital, and cash management. Prerequisites are soph st; Econ 103(P) & 104(P); Bus Adm 201(P) or 207(P); Bus Adm 210(P) or 211(P).

TEXTBOOK and CONNECT FINANCE: An electronic textbook and electronic homework assignment is available on directly from McGraw-Hill together, called Connect-Plus for $130. You can purchase Connect without the electronic textbook for $60 also from McGraw-Hill. The textbook is: Ross, Westerfield, and Jordan: Essentials of Corporate Finance 8th 2013 McGraw-Hill. You will need Connect for your homework assignments. As outlined in this syllabus, assignments will make up a significant portion of your overall course grade. Both Connect and Connect-Plus can be accessed by clicking the Connect Registration link below. Purchase of materials through the UWM bookstore is more expensive, as they have a loose-leaf book with Connect.

REGISTRATION FOR CONNECT: To register for Connect, please register at the web link for our class is given below. Click the blue Buy Connect to register for CONNECT-only or click the blue Buy Connect Plus to purchase an electronic version of the textbook. The web link is: http://connect.mcgraw-hill.com/class/r_marcus_350_spring2014. When registering online, you will have the option of purchasing Connect or Connect Plus; should you require it, you may register and access Connect or Connect Plus for 3 weeks before paying for it. Connect Plus gives you access to the full textbook, which is both searchable and printable.

SUPPORT AND TIPS FOR CONNECT: If you have any issues while registering or using Connect, please contact the Care Team for McGraw-Hill through http://www.mhhe.com/support . Our course examines Chapters 1-15. To avoid problems related to unexpected technical issues, you are advised not to wait until the last moment to complete assignments.

FINANCIAL CALCULATOR: You will need a financial calculator of your own choosing. My recommendation is Texas Instruments BAII Plus or the professional version. The textbook is designed for use of either HP-10B or TI BA II Plus Financial Calculators. Either the TI or HP is fine with me. Most APPS for smart phones include some financial calculator functions, but few of the free APPS have all that is needed for bond analysis, such as IRR and uneven cash flows. It is possible to purchase a BA II Plus App for $14.99 on iTunes. BYC means Bring Your Calculator!

MIDTERMS, FINALS, and HOMEWORK WEIGHTS: There will be two midterm examinations and one final. Each midterm exam is worth 40 of 178 points in the class. We will also have homework assignments that will constitute 50 of 178 of the points that are completed on Connect Finance from McGraw-Hill. The Final is worth 48 points.

MIDTERM EXAM DATES: The midterms for 350 are in class. The first midterm is on Tuesday, February 18 in class and covers Chapters 1-5 for 40 points. The second midterm is on Thursday, April 3 in class and covers Chapters 6-10 for 40 points. The final covers Chapters 11-14. Professor Marcus provides a list of key financial formulas attached to the midterms and finals. Students will bring their own financial calculator to the exams.

FINANCE CONNECT ASSIGNMENTS: There are 14 assignments (9 graded and 5 are ungraded). Each of the ten graded assignments is worth 5 points for a total of 50 points out of 190. The questions are algorithmic so that each student gets different numbers for most problems. The assignments have unlimited number of attempts to retake up to the due dates listed in the "Daily Schedule of Lectures, Discussion Sections, and Connect Assignments" appearing below. There is no penalty for retaking the assignment. I permit (and encourage you) to print assignment, but you must enter your answers on the website.

FINAL EXAM: 350 Finance Lecture 401 is on Tuesday, May 13 at 10 A.M. to Noon. The final covers Chapters 11-14 for 48 points out of 178 possible in the course. The final has more time available, permitting a longer exam than the midterms.

GRADES: Grades will be based on the total points earned on midterm 1, midterm 2, the final, and the scores received on the graded assignments in CONNECT FINANCE. A total of 190 is the maximum possible points for the semester. There are no "extra credit" points available. Typically, students who amass points at (or above) the median score will be considered for earning a B or better. Those who are in the lower half will be considered for scores of B- or lower. Scores will be posted on Desire2Learn at: http://d2l.uwm.edu/.

SUPPLEMENTAL INSTRUCTION: Panther Academic Support Services (PASS) offers Supplemental Instruction (SI) review sessions for this course. The SI leader offers review session and is available for walk-in times and online to discuss your questions. Our SI Leader for Bus Adm 350 will be announced when known. https://www4.uwm.edu/pass

CLASSROOM POLICIES: UWM has long-standing policies on academic misconduct, sexual harassment, discrimination, adding, dropping, withdrawal, repeating classes, and changes of grade. These policies are available at: https://pantherfile.uwm.edu/marcus/www/policies.html.

SPECIAL NEEDS: If anyone has a need for note-taking or testing assistance, please feel free to discuss this with me early in the semester. Slide presentations are available weekly in class and will be available on D2L.

SOCIAL CONNECTIVITY: Financial announcements of stock splits, leverage buyouts, and dividend changes occur daily. Some will be highlighted for special attention. These can appear on Facebook walls or as text messages using Twitter. Students will be invited to like a fan page that for Professor Marcus' 350 class. It is called UWMFinance350 and the same name in Twitter. Links to these locations are on the NAVIGATION line on D2L site for our class. You can view the messages sent by clicking either Facebook or Twitter. You can click the like "thumps up" icon in Facebook or click follow in Twitter to have it sent to your own page or phone.

OBJECTIVE: To understand the everyday financial activities of collecting from customers and paying suppliers, finding long-term financing to pay for investments, and deciding which investments offer the greatest promise. These are issues sometimes called Financial Management, but they are duties of a financial manager. Financial managers who do these tasks well reduce the risk of financial distress and increase the opportunities for growth and profits.


Schedule of Lectures, Discussions, & Connect Assignments

WEEK 1: Lecture #1 on Tuesday, January 21: Chapter 1- Introduction to Financial Management

Lecture #2 is on Thursday, January 23: Chapter 2 - Financial Statements, Taxes, and Cash Flows.

Tuesday, January 28: Due date for the first Finance Connect assignment. This assignment is ungraded from Chapter 1 .


WEEK 2: Lecture #3 on Tuesday, January 28: Chapter 2 (continued) - CFFA or Cash Flow From Assets

Lecture #4 on Thursday, January 30 Chapter 3 - Working with Financial Statements (emphasis on ratio analysis).

Tuesday, February 4: Due date for the second assignment Finance Connect assignment from Chapters 2 & part of chapter 3. This assignment is graded, but you have multiple times to take it before the deadline.


WEEK 3: Lecture #5 on Tuesday, February 4: Chapter 3 (continued) - The Du Pont Identity

Lecture #6 on Thursday, February 6: Chapter 4 Introduction to Valuation (BYC = Bring Your Calculator!)

Monday, February 11: Due date for the third Finance Connect assignment from Chapter 3 and Chapter 4. This assignment is graded.


WEEK 4: Lecture #7 on Tuesday, February 11: Chapter 5 - Discounted Cash Flow Valuation (BYC)

Lecture #8 on Thursday, February 13: Chapter 5 (continued) - Effective Annual Rates (EARs), Perpetuities, Midterm 1 Overview - a guest lecturer will be coming that day.

Tuesday, February 18 is also the due date for the fourth Finance Connect ungraded assignment based on Chapter 5 as a great review also for Midterm 1.


WEEK 5: Tuesday, February 18: is our MIDTERM #1 in classroom S185 from 11-12:15PM and BYC! Midterm 1 covers Chapters 1-5.

Lecture #9 on Thursday, February 20: Chapter 6 - Interest Rates and Bond Valuation

Tuesday, February 25: Due date for fifth Finance Connect assignment from Chapter 6. This assignment is graded.


WEEK 6: Lecture #10 on Tuesday, February 25: Chapter 6 (continued) - Bond Features, Bond Types, and Yield Curves

Lecture #11 on Thursday, February 27: Chapter 7 - Equity Markets and Stock Valuation

Tuesday, March 4: Due date for sixth Finance Connect assignment from Chapter 7. This assignment is graded.


WEEK 7: Lecture #12 on Tuesday, March 4: Chapter 7 (continued) - Preferred Stocks, Primary Markets, and Secondary Markets for Equities

Lecture #13 on Tuesday, March 6: Chapter 8 - NPV is Net Present Value and IRR is Internal Rate of Return

Tuesday, March 11: Due date for seventh assignment from Finance Connect from Chapter 8. This assignment is graded.


WEEK 8: Lecture #14 on Tuesday, March 11 Chapter 8 (continued) - Capital Budgeting and Capital Rationing

Lecture #15 on Thursday, March 13 Chapter 9 - Making Investment Decisions

Tuesday, March 25 after Spring Recess: Due date for eighth Finance Connect assignment based on Chapter 9. This assignment is graded.


SPRING RECESS: March 16-23

WEEK 9: Lecture #16 on Tuesday, March 25 Chapter 9 (continued) - Sensitivity Analysis of Capital Projects and Managerial Options

Lecture #17 on Thursday, March 28 Chapter 10 - Lessons from Capital Market History

Tuesday, April 1: Due date for ninth Finance Connect assignment based on Chapter 10. This assignment is ungraded.


WEEK 10: Lecture #18 on Tuesday, April 1: Chapter 10 (continued) Capital Market Efficiency and review for Midterm #2

Thursday, April 3: is our MIDTERM #2 in classroom S185 from 11AM to 12:15PM and BYC! Midterm 2 covers Chapters 6-10.

Tuesday, April 8, there is NO Connect Assignment #10 and nothing is due.


WEEK 11: Lecture #19 on Tuesday, April 8: Chapter 11 - Risk and Return

Lecture #20 on Thursday, April 10: Chapter 11 (continued) - The Security Market Line and CAPM (The Capital Asset Pricing Model)

Tuesday, April 15th - TAX DAY: Due date for the tenth Finance Connect assignment from Chapter 11. This assignment is graded.


WEEK 12: Lecture #21 on Tuesday, April 15: Chapter 12 - The Cost of Capital

Lecture #22 on Thursday, April 16: Chapter 12 (continued) - Some methods for finding the cost of capital for projects not similar to the whole firm

Tuesday, April 22: Due date for the eleventh Finance Connect assignment from Chapter 12. This assignment is graded.


WEEK 13: Lecture #23 on Tuesday, April 22: Chapter 13 - Leverage and Capital Structure

Lecture #24 on Thursday, April 24: Chapter 13 (continued) - An Optimal Capital Structure?

Tuesday, April 29: Due date for the twelfth Finance Connect assignment from Chapter 13. This assignment is ungraded.


WEEK 14: Lecture #25 on Tuesday, April 29: Chapter 14 - Dividends and Dividend Policy

Lecture #26 on Thursday, May 1: Chapter 14 (continued) - Stock Dividends, Stock Repurchases, Should Firms Buy Back Shares?

Tuesday, May 6: Due date for Thirteenth Finance Connect assignment from Chapter 14. This assignment is graded.


WEEK 15: Lecture #27 on Tuesday, May 6: Chapter 14 (continued) - Stock Splits and Reverse Stock Splits

Lecture #28 on Thursday, May 8: Chapter 14 (continued) - DRIPs, FRIPs, and the Importance of Dividends & Review for the Final

Friday, May 8: This is the University Study Day. No classes.

Tuesday, May 13: Due date for our fourteenth Finance Connect assignment from Chapters 11-14. This assignment is ungraded.

Tuesday, May 13: is our FINAL in classroom S185 from 10AM to Noon. Remember to BYC! The Final covers Chapters 11-14.


Scores and grades will be posted on D2L at http://d2l.uwm.edu/ and an email notice will be sent when grades have been reported on PAWS.