Business Scholars: Principles of Finance 351



Lecture 001 TR 9:30-10:45 AM (12842) in Lubar Hall S165
Fall Semester 2012, 3 credits

INSTRUCTOR: Richard D. Marcus, 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: After our classes on both Tuesdays and Thursdays from 11:00AM - noon in Lubar Hall S430F and by appointment.

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



BUSINESS SCHOLARS: PRINCIPLES OF FINANCE 351: Fundamentals of financial management, analysis of financial statements, risk and return, debt/equity valuations, cost of capital, capital budgeting, capital structure, and dividend policies. Prerequistes: jr st; admis to Business Scholars Prog; Econ 103(P) & 104(P); Bus Adm 207(P) & 211(P).

TEXTBOOK and CONNECT: Ross, Westerfield, and Jordan, Fundamentals of Corporate Finance, 10th Ed. (Standard Edition),ISBN 978-0-07-803463-3, McGraw-Hill, 2013. The book is available as an electronic textbook with Connect (which is required to complete homework). The pricing for the Fundamentals e-book with Connect is $114.25, which is well below the list price for the book alone of $225. If you share a textbook, Connect is still required, which alone costs $49.99. 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 by clicking the link in Registration for Connect below. Purchase of materials through the bookstore is more expensive.

REGISTRATION FOR CONNECT: To register for Connect, click the web link for our class: Select Buy Online or Free Trial, unless you purchased something at the bookstore with a code.

CONNECT and CONNECT-PLUS: 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. The electronic textbook is both searchable and printable.

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 free APPS have all that are needed for bond analysis, IRR, and uneven cash flows. It is possible to purchase a BA II Plus App for $14.99 on iTunes.

EXAMINATION AND HOMEWORK WEIGHTS: There will be one midterm examination and one final. Each exam is worth 40% of the class. We will also have ten homework assignments that will constitute 20% of the points.

MIDTERM EXAM: The midterm for 351 is on Thursday, October 11, 2012. This exam covers material from Chapter 1-11 and lecture material. The midterm has 100 points possible.

CONNECT HOMEWORK: There are 9 CONNECT and 1 finance lab paper assignment for 10 homework assignments, each work 5 points, or 50 points. Thus, 20% of your grade is based on Connect Homework.

FINAL EXAM: The final for 351 on Monday, December 17, 2012 at 10:00 to noon in our classroom. This exam covers primarily Chapters 12-21 and classroom material. The final has 100 points possible.

GRADES: Grades will be based on the total points earned on the midterm, final, homework manager, and attendance at special events. There are no "extra credit" points available. Typically, students who amass points at (or above) the median score will be considered for earning an A or A-. Those who are in the lower half will be considered for B+ and B, however, it is possible to earn much lower grades for those who do not demonstrate an understanding of the key objectives of corporate finance. Scores will be posted on Desire2Learn at:

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:

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 will be used for both 350 students and 351 students called UWMFinance350 or the same name in Twitter. Links to these locations will be added to the D2L site for our class.

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 are part of the 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.

Daily Schedule of Lectures and Discussion Sections

Labor Day is Monday, September 3: The university is closed.

Lecture #1 on Tuesday, September 4: Chapter 1- Introduction to Corporate Finance

Lecture #2 is on Thursday, September 6: Chapter 2 - Financial Statements, Taxes, and Cash Flows. Start Connect Homework #1.

Lecture #3 on Tuesday, September 11: Chapter 3 - Working with Financial Statements (with an emphasis on Ratio Analysis). Connect Homework #1 is due.

Lecture #4 on Thursday, September 13 Chapter 4 - Long-Term Financial Planning and Growth. Start Connect Homework #2.

Lecture #5 on Tuesday, September 18: Chapter 5 - Introduction to Valuation and Chapter 6 - Discounted Cash Flow Valuation. Connect Homework #2 is due.

Lecture #6 on Thursday, September 20: Chapter 7 - Interest Rates and Bond Valuation. Start Connect Homework #3.

Lecture #7 on Tuesday, September 25: Chapter 8 - Stock Valuation (with an emphasis on the dividend discount model). Connect Homework #3 is due.

Class #8 on Thursday, September 27 in Finance Lab: Field Trip to the David Nicholas Finance Lab and use of FactSet. Homework #4 is distributed which is a finance project using FactSet in the lab.

Lecture #9 on Tuesday, October 2: Chapter 9 - Net Present Value and Other Investment Criteria. Homework #4 is not on Connect, it is a lab project and is due.

Lecture #10 on Thursday, October 4: Chapter 10 - Making Capital Investment Decisions. Start Connect Homework #5.

Lecture #11 on Tuesday, October 9: Chapter 11 - Project Analysis and Evaluation and review for Midterm 1.A list of some key formulas will be handed out and will be attached to the midterm given on October 25. Connect Homework #5 is due.

Lecture #12 on Thursday, October 11 is our Midterm,  which covers Chapters 1 - 11 and lecture material.

Tuesday, October 16, no finance class, instead it will be Amit Bhatnagar's marketing class. He has no class on Wednesday when we go to the Majestic Theater for the Marcus Annual Shareholder's Meeting.

Lecture #13 will be for the class to attend the Marcus Corporation Annual Stockholders Meeting. On Wednesday, October 17, 2013, UWM buses will take us to the Majestic Theater in Brookfield, leaving at 7:30 AM for the 9AM meeting (preceded by a reception). We will leave at 10:30 pm and be back on campus before noon. The University will provide transportation to the event and back at the end of the meeting to Lubar Hall central driveway.
Lecture #14 on Thursday, October 18 will be a Q&A discussion with Douglas Neis, the CFO and Treasurer of the Marcus Corporation in our classroom.

Lecture #15, Tuesday, October 23: Chapter 12 - Some Lessons From Capital Market History.

Lecture #16 on Thursday, October 25: Chapter 13 - Return, Risk, and the Security Market Line. Start Connect Homework #6.

Lecture #17 on Tuesday, October 30: Is a stock really just an option? An introduction to options and contingent claims. Connect Homework #6 is due.

Lecture #18 on Thursday, November 1: Chapter 14 - The Cost of Capital. Start Connect Homework #7.

Lecture #19 on Tuesday, November 6: Chapter 15 - Raising Capital. Connect Homework #7 is due.

Lecture #20 on Thursday, November 8: Chapter 16 - Financial Leverage and Capital Structure Policy.

Lecture #21 on Tuesday, November 13: Chapter 17 - Dividends and Dividend Policy. Start Connect Homework #8.

Lecture #22 on Thursday, November 15: Chapter 18 - Short-Term Finance and Planning. Connect Homework #8 is due.

Lecture #23 on Tuesday, November 20: Chapter 19 - Cash and Liquidity Management (skip Appendix 20A on credit policy). Start Connect Homework #9.

Thanksgiving is on Thursday, November 22 - School is Closed for both Wednesday and Thursday classes.

Lecture #24 on Tuesday, November 27: Chapter 20 - Credit and Inventory Management. Connect Homework #9 is due.

Lecture #25 on Thursday, November 29: Chapter 21: International Corporate Finance. Start Connect Homework #10.

Lecture #26 on Tuesday, December 4: Time Diversification and the Declining Value of International Diversification in a Global Economy

Lecture #27 on Thursday, December 6: Basics of Event Studies in Finance. Connect Homework #10 is due.

Lecture #28 on Tuesday, December 11: Initial Public Offerings and Review for the final. Primarily Chapters 13-21 and classroom material. A list of key formulas will be distributed and will be attached to the final.

December 13: This is the University Study Day - No classes.

Finals Week is December 14-21.

Final Exam on Monday, December 17, 2012 at 10:00 to noon in our classroom. Scores and grades will be posted on D2L at