Principles of Finance 350 – Spring 2020 – 3 Credits
SHELDON B. LUBAR SCHOOL OF BUSINESS
University of Wisconsin – Milwaukee
Bus Adm 350 Lec 001 is Tues/Thurs 11 AM – 12:15 PM (49947) in Lubar N120
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 4:30PM and Thursdays from 12:15-1:15 PM in Lubar Hall S430F and by appointment.
TELEPHONE: 414-229-4103 (office) or 414-228-7731 (home) or 414-510-7731 (cell)
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: To register for your electronic textbook Essentials of Corporate Finance with SmartBook and Assignments for just $85, which is fifteen dollars lower than Spring 2019! Yeah! 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 or your TAs: Connect + Canvas Deep Integration Student Registration (6) . Or you could also read McGraw-Hill’s one page: Syllabus Language for Bus Adm 350
REQUIRED MATERIAL FOR FINANCE 350: McGraw-Hill electronic textbook with SmartBook and Connect Assignments, 10th Edition, Essentials of Corporate Finance (copywrite 2020) by Ross, Westerfield, and Jordan. Also needed is a financial calculator. See more on this below.
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. They have a good team for a chat session or you may call them at 1-800-331-5094. Our course examines Chapters 1-14. 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. 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 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. BYC means Bring Your Calculator!
ROSS, WESTERFIELD, and JORDAN’s FINANCE BLOG: Problems in North Korea, Greece, Puerto Rico, or the implications of changes in capital gains taxes brought about by the new tax bill and how they impact the stock market are discussed. Our authors have a semi-active blog. http://essentialsofcorporatefinance.blogspot.com/
POINTS FOR MIDTERMS, FINALS, HOMEWORK ASSIGNMENTS, and LEARNSMART WORK: There will be two midterm examinations and one final. Each midterm exam is worth 80 of 470 total points in the class. We will also have homework assignments that will constitute 70 of 470 the points and are completed on Connect Finance from McGraw-Hill. LearnSmart, also on Connect Finance, is worth 10 points per chapter or 140 points of the 470 points. The Final is worth 100 points (50 questions, but we have 2 hours). Hence, about 55% of the points come from in-class exams and 45% from Connect Finance.
GRADING: The total points for the class determine the grade. If your total score is the mean or better you get a B or better, with about equal numbers of A, A-, B+, and B. If your total score is below the mean, there are about equal numbers of B-, C+, C, and fewer C-. Canvas shows both your total score and your percentages. I use total score. Maximum total points is 470.
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 2 in class and covers Chapters 6-10 for 40 points. The final covers Chapters 11-14. I will provide you with a list of key financial formulas attached to both midterms and the final. Students will bring their own financial calculator to the exams.
FINANCE CONNECT ASSIGNMENTS: There are 14 assignments. Each of the 14 graded assignments is worth 5 points for a total of 70 points out of 470 total points. 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, which are near the the dates of each midterm or final. The links to them are all on Canvas by week of the class. 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 Wedneday, May 13 at 10AM to noon in our classroom, N120. The final covers Chapters 11-14 for 50 questions, which amounts to 100 possible in the course. The final has more time available, permitting a slightly longer exam than the midterms.
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. We are lucky to have SI leader Ian Malmberg, firstname.lastname@example.org. He is an excellent finance major and worked with me in the Fall 2019. He will pass out book marks with his office hours early in the semester. His primary assignment is Dr. Steve Trick, but he knows everything about my class in Finance 350.
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, on my page UWMFinance350. You can view the messages sent by clicking Facebook and searching for UWMFinance350 or through a link on the Canvas page for our class. You do NOT have to join Facebook to look at our page. Or, if you are Facebook user, you can click the like “thumps up” icon in Facebook 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, & Connect and SmartBook
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 Suggested due date for the first Finance Connect assignment and LearnSmart Chapters 1 and 2. This assignment is graded from Chapter 1. The real due date (February 20) is just around Midterm 1, but it is best practice to “keep up” with the lectures.
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 of February 20.
Can you believe it? We have 29 days this month in 2020 is a Leap Year! Gilbert and Sullivan built The Pirates of Penzance on Leap Years, where a 21 year old (Frederic) has only seen 5 birthdays in this three minute song called, “A Paradox.” https://www.youtube.com/watch?v=b5VMp2pTVAM
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!)
Tuesday, February 11: Suggested due date for the third Finance Connect assignment from Chapter 3 and Chapter 4 and LearnSmart Chapters 3 and 4. This is a graded Connect assignment. Do it now, but the final due date is February 20.
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.
Tuesday, February 18 is also the suggested due date for the fourth Finance Connect is a graded assignment based on Chapter 5 and LearnSmart Chapter 5, both reviews for our upcoming Midterm 1.
WEEK 5: Tuesday, February 18: is our MIDTERM #1 in classroom N120 from 11-12:15PM and BYC! Midterm 1 covers Chapters 1-5.
Thursday, February 20 – Final Due Date for all SmartBook Chapters 1-5 and Connect Assignments for the first third of our class
Lecture #9 also on Thursday, February 20: Chapter 6 – Interest Rates and Bonds
Tuesday, February 25: Suggested due date for the fifth Connect assignment from Chapter 6. This assignment is graded. Our due date for the second section of 350 is Saturday, April 4. But best to do the assignments closest to the chapter we are studying.
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 3: Suggested due date for sixth Finance Connect assignment from Chapter 7. This assignment is graded. Again the final due date is April 5.
WEEK 7: Lecture #12 on Tuesday, March 3: Chapter 7 (continued) – Preferred Stocks, Primary Markets, and Secondary Markets for Equities. I expect that I will have a substitute lecturer this day giving my lecture as I will be on a field trip with another class. I may be back at noon for the last few minutes of class.
Lecture #13 on Thursday, March 5: Chapter 8 – NPV is Net Present Value and IRR is Internal Rate of Return
Tuesday, March 10: Suggested due date for seventh assignment from Finance Connect from Chapter 8. This assignment is graded. Due for real on April 4. Guess who in our class was born on March 10, 1953? I know, but I’m not telling.
WEEK 8: Lecture #14 on Tuesday, March 10: Chapter 8 (continued) – Capital Budgeting and Capital Rationing
Lecture #15 on Thursday, March 12: Chapter 9 – Making Investment Decisions
Tuesday, March 24 after Spring Recess: Suggested due date for eighth Finance Connect assignment based on Chapter 9. This assignment is graded. Due for real on April 4.
SPRING RECESS: March 15-21
WEEK 9: Lecture #16 on Tuesday, March 24: Chapter 9 (continued) – Sensitivity Analysis of Capital Projects and Managerial Options
Lecture #17 on Thursday, March 26: Chapter 10 – Lessons from Capital Market History
Tuesday, March 31: Suggested due date for ninth Finance Connect assignment based on Chapter 10. This assignment is graded. Due for real on April 4.
WEEK 10: Lecture #18 on Tuesday, March 31: Chapter 10 (continued) Capital Market Efficiency and review for Midterm #2 later this week.
Thursday, April 2 is our MIDTERM #2 in classroom S185 from 11AM to 12:15PM and BYC! Midterm 2 covers Chapters 6-10.
Saturday April 4 is our Final Due Date for Connect assignments and LearnSmart Chapters 5-9.
There is no suggested Connect assignment due on Tuesday, April 9.
WEEK 11: Lecture #19 on Tuesday, April 7: Chapter 11 – Risk and Return
Lecture #20 on Thursday, April 9: Chapter 11 (continued) – The Security Market Line and CAPM (The Capital Asset Pricing Model)
Tuesday, April 14: Suggested due date for the tenth Finance Connect assignment from Chapter 11. This assignment is graded. The real due date now is May 14.
WEEK 12: Lecture #21 on Tuesday, April 14: 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 21: Suggested due date for the eleventh Finance Connect assignment from Chapter 12. This assignment is graded. The real due date is May 14.
WEEK 13: Lecture #23 on Tuesday, April 21: Chapter 13 – Leverage and Capital Structure
Lecture #24 on Thursday, April 23: Chapter 13 (continued) – An Optimal Capital Structure?
Tuesday, April 28: Suggested date for the twelfth Finance Connect assignment from Chapter 13. This assignment is graded. Due for real on May 14.
WEEK 14: Lecture #25 on Tuesday, April 28: Chapter 14 – Dividends and Dividend Policy
Lecture #26 on Thursday, April 30: Chapter 14 (continued) – Stock Dividends
Tuesday, May 5: Suggested due date for Thirteenth Finance Connect assignment from Chapter 14. This assignment is graded. Due May 14.
WEEK 15: Lecture #26 on Tuesday, May 5: Should firms repurchase their shares?
Lecture #27 on Thursday, May 7: Stock Splits, Reverse Stock Splits, and a Review for our Final
Friday, May 8: This is the University Study Day. No classes.
Wednesday, May 13: is our FINAL in classroom N120 from 10 to noon. Remember to BYC! The Final covers Chapters 11-14.
Thursday, May 14 is Final Deadline at midnight for SmartBook Chapters 10-14 and graded Connect assignments 10-14.
Scores and grades will be posted on Canvas and an email notice will be sent when grades have been reported on PAWS.