Business Scholars Finance 351 – Spring 2021

Business Scholars: Principles of Finance 351

Syllabus – Spring Semester 2021, 3 credits online

UWM, SHELDON B. LUBAR SCHOOL OF BUSINESS

Bus Am 351, Section 201, Mon & Wed at 9:45-11 AM (45412) synchronously online and recorded as well

INSTRUCTOR: Richard D. Marcus, Ph.D.is an Associate Professor of Business and the Chair of the LSB Executive Committee.  When chatting or emailing me, I typically prefer Dick to Richard, I prefer Prof to Doc, or even Hey-You works too.

OFFICE: S430F in Lubar Hall. My mailbox is also on the fourth floor of Lubar Hall, though of course, I will do most of my synchronous teaching from my home in Fox Point.

OFFICE HOURS: Online Collaborate Ultra Office Hours will be on Mondays 1 to 2 PM, or by phone or by email most anytime, and by appointment.

TELEPHONE: 414-510-7731 (cell)

E-MAIL:  Put Finance 351 in the subjection line and send to marcus@uwm.edu

HOMEPAGE: https://sites.uwm.edu/marcus/

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).

Our Canvas Picture – Represents Taking a Financial Journey from Unsplash

TEXTBOOK and CONNECT FINANCE: To register for your electronic textbook FUNDAMENTALS OF CORPORATE FINANCE  with SmartBook and Assignments for just $85, which is quite a deal, so first go onto your Canvas site to click a lesson.  There is a 3 minute video for understanding Canvas and McGraw-Hill Connect at: https://vimeo.com/showcase/5316669/video/281874940. The video talks of a “rental” and “purchase” price, but the $85 is the price. If after using the electronic version, you would like a loose-leaf paper version mailed to you, McGraw-Hill will do that for $60 more. The electronic version is printable as well. Or, if you go to e-Campus, you can buy the electronic AND loose-leaf for $170.78. They will give you a 16-digit code to access the electronic book, Connect and SmartBook as well as get a looseleaf paper copy that will be mailed to you in 2 days. If you want more help in signing up, see this one-page PDF called “Connect + Canvas Deep Integration” link or chat with Dick Marcus: Connect + Canvas Deep Integration Student Registration (6) . NOTE:  This is the same price as “Essentials of Corporate Finance,” used in Finance 350. But our textbook has 40% more pages (952 versus just 652), but we don’t read all of it.  Whew.

REQUIRED MATERIAL FOR FINANCE 351: McGraw-Hill electronic textbook with SmartBook and Connect Assignments, Fundamentals  of Corporate Finance by Ross, Westerfield, and Jordan. Also needed is a financial calculator. See more on this below.

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. For even less, can use 10bii Financial Calculators for $5.99 from i-Tunes or Android, or Vicinno FinCalc Pro for $1.99 for i-Tunes and Android. If you plan on being a Finance or Accounting Major, I suggest that you get a physical (non-cell phone) calculator, as other classes will not permit use of a cell phone, but I do permit cell phones in my class and on my online SmartBook and exams. BYC means Bring Your Calculator!

GOALS: Students will 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. They learn 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.

OBJECTIVES:  Students will (1) Find the value of bonds and stocks. They will calculate Net Present Value and Internal Rates of Return to see if a new investment makes financial sense; (2) Perform Scenario Analysis and Sensitivity Analysis to see if a new investment or innovation makes financial sense under different states of the world; (3) Use and see solutions created by Excel, financial calculators, and tables to estimate values and risks of investments;  (4) Show their understanding via multiple assignments, two midterms, and a final; (5) Work in teams and demonstrate interpersonal activities in weekly discussion sections when we meet in person; (6) Students will demonstrate use of financial ratios via the Du Pont Identity; they will know the benefits of diversification for managing risk; and they will be able to understand how to find the cost of capital for firm; (7)· Discuss the chief mission of the financial manager expanding from the goal of maximizing returns to shareholders to the broader issues identified by the Business Roundtable of other stakeholders and social responsibility; (8) Discuss the strong, semi-strong, and weak forms of the efficient market hypothesis examines harm done by insider traders and inside information, and the duty financial managers have to provide information to the widest groups possible via corporate announcements; and (9) Examine risks of domestic and international stocks and bonds as well as discuss the value of diversifying globally.

EXAMINATION AND HOMEWORK WEIGHTS: There will be one midterm examination and one final. Each exam is worth 30% of the class. We will also have 21 SmartBook Chapters assignments that take 20-28 minutes each that will constitute 40% of the points.

MIDTERM EXAM: The midterm for 351 is on Wednesday, March 10, 2021. This exam covers material from Chapter 1-11 and lecture material. The midterm has 100 points possible. The questions will be online on Canvas.  The maximum time for the midterm is 100 minutes.  You may take it anytime from 7AM to Midnight that day.

SmartBook ASSIGNMENTS ON CONNECT:  There are 21 chapters we cover, with 21 SmartBook assignments worth 6 points each for 126 points.  This will get you grounded in the textbook material.  There are some additional points our individual stock valuation worksheet of 4 points on February 22.  In all, 130 points, which makes up 39% of the maximum total of 330 points, with the midterm and final having 100 points each.  It is best to do the SmartBook assignments in parallel to the chapters being discussed but the due date for SmartBook Chapters 1-11 is March 11, and the due date for SmartBook Chapters 12-21 is May 21.

FINAL EXAM: The final for 351 on Thursday, May 20, 20210 at 7:30am to 9:30am. This exam covers primarily Chapters 12-21 and classroom material. The final has 100 points possible. The exam is online and so I will allow anyone to take it any time from 7AM to Midnight on Thursday, May 20, and will allow 120 minutes.

GRADE DISTRIBUTION: Grades will be based on the total points earned on the midterm, final, SmartBook assignments, and attendance at two 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. Both total points and percentage scores appear on Canvas when you click GRADES.

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://sites.uwm.edu/marcus/policies/.

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 on Canvas.  Recordings of our synchronous classes will also be posted on Canvas.

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 our class’ Facebook page, and if important, will be noted in class. Students will be invited to like a fan page that will be used for both 350 students and 351 students called UWMFinance350. The link to UWMFinance350 is given in Canvas.  You do not have to join Facebook to look at our page.

SUPPLEMENTAL INSTRUCTION: Panther Academic Support Services (PASS) offers Supplemental Instruction (SI) review sessions for Principles of Finance 350 and 351.  At this time, I am not sure who will be doing this, but will let you know as it is determined.

OUR JOURNEY:  As we explore finance in this virtual world this spring, my hope is that you will understand the everyday financial activities of collecting money 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.  And you will be the financial manager of your life as well.

Daily Schedule of Lectures and Exams

WEEK 1: Do SmartBook Chapters 1 and 2.

Lecture #1 on Monday, January 25 at 9:45am: Chapter 1- Introduction to Corporate Finance

Lecture #2 is on Wednesday, January 27 at 9:45am: Chapter 2 – Financial Statements, Taxes, and Cash Flows.

WEEK 2: Do SmartBook Chapters 3 and 4.

Lecture #3 on Monday, February 1 at 9:45am: Chapter 3 – Working with Financial Statements (with an emphasis on Ratio Analysis).

Lecture #4 on Wednesday, February 3 at 9:45am: Chapter 4 – Long-Term Financial Planning and Growth.

WEEK 3: Do SmartBook Chapters 5 and 6.

Lecture #5 on Monday, February 8 at 9:45am: Chapter 5 – Introduction to Valuation

Lecture #6 on Wednesday, February 10: Chapter 6 – Discounted Cash Flow Valuation.

WEEK 4: Do SmartBook Chapters 7 and 8.  Yeah, it is on bonds and then on stocks!

Lecture #7 on Monday, February 15 at 9:45am: Chapter 7 – Interest Rates and Bond Valuation.

Lecture #8 on Wednesday, February 17 at 9:45am: Chapter 8 – Stock Valuation (with an emphasis on the dividend discount model).

WEEK 5: Do SmartBook Chapter 9.

Valuation Project as Lecture #9 on Monday, February 22 at 9:45am:  Using Work Sheets on Assigned Stocks related to Chapter 8.

Send in your stock valuation using the Dividend Growth Model by Midnight, February 23.

Lecture #10 on Wednesday, February 24: Chapter 9 – Net Present Value and Other Investment Criteria.

WEEK 6: Do SmartBook Chapters 10 and 11

Lecture #11 on Monday, March 1 at 9:45am: Chapter 10 – Making Capital Investment Decisions.

Lecture #12 on Wednesday, March 3 at 9:45am: Chapter 11 – Project Analysis and Evaluation.

WEEK 7: Midterm Week

Lecture #13 on Monday, March 8 at 9:45am:  Review for Chapters 1-11 for our midterm on March 10th.  A list of some key formulas will be available on Canvas to use on your midterm.

MIDTERM on Wednesday, March 10 will be 20 Short Essay Style Questions on Canvas: Covers Chapters 1 – 11 and lecture material.  Though the exam is supposed to by at 9:45-11:00am, I will allow you to take anytime on March 10 from 7am to Midnight, and you will have 100 minutes.  [You may need your calculator for this question to figure out my age, but I was born on March 10 in 1953] . And BYC because some questions can really be calculations of things like NPV or IRR.

Thursday, March 11 at midnight is the final due date for SmartBook assignments from Chapters 1-11.

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SPRING BREAK! — March 21- 28

WEEK 8: Do SmartBook Chapters 12 and 13

Lecture #15, Monday, March 15 at 9:45am: Chapter 12 – Some Lessons From Capital Market History.  

Lecture #16 on Wednesday, March 17 at 9:45am: Chapter 13 – Return, Risk, the Security Market Line, and something called CAPM (the Capital Asset Pricing Model).  I will try to wear all green for St. Patrick’s Day.  You can too, if you wish.

SPRING BREAK! — March 21- 28

WEEK 9: Do SmartBook Chapter 14

Lecture #17 on Monday, March 29 at 9:45am:  Is a stock really just an option? An introduction to options and other contingent claims [Not related to a chapter, but lecture only.]

Lecture #18 on Wednesday, March 31 at 9:45am : Chapter 14 – The Cost of Capital.

WEEK 10: Do SmartBook Chapters 15 and 16

Lecture #19 on Monday, April 5 at 9:45am: Chapter 15 – Raising Capital.

Lecture #20 on Wednesday, April 7:  Chapter 16 – Financial Leverage and Capital Structure Policy.

WEEK 11:  Do SmartBook Chapters 17 and 18

Lecture #21 on Monday, April 12 at 9:45am: Chapter 17 – Dividends and Dividend Policy. [Yeah Dividends!  Dick’s favorite topic.]

Lecture #22 on Wednesday, April 14 at 9:45am: Chapter 18 – Short-Term Finance and Planning.

WEEK 12: Do SmartBook Chapters 19 and 20

Lecture #23 on Monday, April 19 at 9:45am: Chapter 19 – Cash and Liquidity Management (skip Appendix 20A on credit policy).

Lecture #24 on Wednesday, April 21 at 9:45am: Chapter 20 – Credit and Inventory Management.

WEEK 13: Do SmartBook Chapter 21

Lecture #25 on Monday, March 26 at 9:45am: Chapter 21: International Corporate Finance.

Lecture #26 on Wednesday, March 28 at 9:45am: Time Diversification and the Declining Value of International Diversification in a Global Economy [Extension of Chapter 21 topics.]

WEEK 14: No chapter assignments, just lecture notes

Lecture #27 on Monday, May 3 at 9:45am: Basics of Event Studies in Finance [Because many on for teacher’s papers are based on Event Studies.]

Lecture #28 on Thursday, May 5: Management Buyouts (MBOs), Corporate Governance, and Business Ethics.

WEEK 15: No chapter assignments, just lecture notes

Lecture #29 on Tuesday, May 10: Leveraged Buyouts (LBOs) and Merger Waves

Lecture #30 on Thursday, May 12: Review for the final. Primarily Chapters 12-21 and classroom material. A list of key formulas will be available on Canvas for the final. The final is 20 short essays completed on Canvas.

Friday, May 14: This is the University Study Day – No classes.

Finals Week is May 15-21.

Final Exam on Thursday, May 20, 2021 at 7:30am – 9:30am. Yup, it is early, but you will really have anytime from 7AM to Midnight on May 20 to complete your final on Canvas.  Again, it is 20 short essay questions and calculations on Canvas.  You will have 120 minutes. Scores and grade distributions will be posted on Canvas.

Friday, May 21 at midnight is the due date for the SmartBook assignments from Chapters 12-21.

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