Principles of Finance 350 – sections 401 and 402 – Spring 2023 – 3 Credits
Syllabus
UWM, Sheldon B. Lubar COLLEGE OF BUSINESS
Bus Adm 350 Sec 401 is M & W 11:30 AM – 12:20 AM in Lubar Hall N146
Bus Adm 350 Sec 402 is M & W 1:30 PM – 2:20 AM in Lubar Hall N140
Canvas Unsplash Photo by Alexsandr Oychinnikov – A Financial Hike to the Peak!
INSTRUCTOR: Richard D. Marcus, Ph.D.is an Associate Professor of Business and the Chair of the LSB Executive Committee. I prefer Dick to Richard. He/Him.
OFFICE: S430F in Lubar Hall. My mailbox is also on the fourth floor of Lubar Hall.
OFFICE HOURS: Mondays and Wednesdays from 12:30 to 1:30 pm in Lubar Hall S430F and by appointment.
TELEPHONE: 414-510-7731 (best is my cell, call or text) or 414-251-6544 (office Microsoft Teams line which is far less useful as I carry around my cell phone.
E-MAIL: Put Finance 350 in the subjection line and send to marcus@uwm.edu/
HOMEPAGE: https://sites.uwm.edu/marcus/
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).
REQUIRED MATERIAL FOR FINANCE 350: McGraw-Hill electronic textbook with SmartBook and Connect Assignments, 11th Edition, Essentials of Corporate Finance (copywrite 2023) by Ross, Westerfield, and Jordan. Also needed is a financial calculator. See more on this below.
TEXTBOOK and CONNECT FINANCE: The start date to get our electronic textbook and Connect assignments is Monday, January 9, 2023. To register for your electronic textbook Essentials of Corporate Finance with SmartBook and Assignments for just $85, which is a great deal. The best way to get registered is to go to our Canvas site and click one of the two assignments for Chapter 1 (SmartBook or Assignment #1). This will let you to register for our electronic book, SmartBook, and Assignments.
REGISTERING FOR CONNECT: There is a 3-minute video for understanding Canvas and McGraw-Hill Connect at: https://vimeo.com/showcase/5316669/video/281874940 and also a link to it in Canvas. 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 $39 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
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.
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.
FINANCIAL CALCULATOR OPTIONS AND PERMISSION TO USE CELL PHONE VERSIONS FOR OUR CLASS: 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. Accounting classes tend to like the TI BA II Plus. There are some free apps that work with ads: Android has BA Calc ( https://play.google.com/store/apps/details?id=com.cfa.calculator&hl=en_US ). Apple has one that charges $1.99 BA Plus Calculator ( https://apps.apple.com/us/app/ba-plus-calculator/id1510190657). Be aware that while many 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 Monday, February 21 in class and covers Chapters 1-5 for 40 points. The second midterm is on Wednesday, April 5 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 and post them for the midterms and the finals. 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 Friday, May 19 at 12:30- 2:30 PM in classrooms that will be assigned by the Registrar for our Joint Final. 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.
TEACHING ASSISTANT: Discussions 601 – 610 are all on Fridays for our class. We have two exceptionally experienced TAs in those sections with you. For Discussion Sections 601 – 605, her name is Sayeda Shefa ssshefa@uwm.edu. For Discussion Sections 606 – 610, his name is Md Samiul Islam mdsamiul@uwm.edu.
SUPPLEMENTAL INSTRUCTION: Panther Academic Support Services (PASS) offers Supplemental Instruction (SI) review sessions for this course. We have an excellent SI Leader, Andrew (“Drew”) Skyberg to offer guidance 4 hours per week on the second floor of Lubar Hall. Drew Skyberg skyberg@uwm.edu will have hours listed per week on Canvas and offers reviews before both midterms and the final. We are fortunate to have Drew’s assistance.
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 in class and will be available ons 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 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.
I also have a LinkedIn site with over 100 articles on finance, economics, and business that I write (usually tightly fixed to three paragraphs only). The QR for my LinkedIn page is:
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.
Schedule of Lectures, & Connect and SmartBook
WEEK 1: Lecture #1 on Monday, January 23: Chapter 1- Introduction to Financial Management
Lecture #2 is on Wednesday, January 25: Chapter 2 – Financial Statements, Taxes, and Cash Flows.
Discussion Section #1 – Friday, January 27
Sunday, January 29: 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 (Friday, May 19 at Midnight) but it is best practice to “keep up” with the lectures.
WEEK 2: Lecture #3 on Monday, January 30: Chapter 2 (continued) – CFFA or Cash Flow From Assets
Lecture #4 on Wednesday, February 1: Chapter 3 – Working with Financial Statements (emphasis on ratio analysis).
Discussion Section #2 – Friday, February 3
Sunday, February 5: 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 May 19.
WEEK 3: Lecture #5 on Monday, February 6: Chapter 3 (continued) – The Du Pont Identity
Lecture #6 on Wednesday, February 8: Chapter 4 Introduction to Valuation (BYC = Bring Your Calculator!)
Discussion Section #3 – Friday, February 10
Sunday, February 12: 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 May 19.
WEEK 4: Lecture #7 on Monday, February 13: Chapter 5 – Discounted Cash Flow Valuation (BYC)
Lecture #8 on Wednesday, February 15: Chapter 5 (continued) – Effective Annual Rates (EARs), Perpetuities, Midterm 1 Overview.
Discussion Section #4 – Friday, February 17
Sunday, February 20 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: Monday, February 20: is our MIDTERM #1 in class and BYC! Midterm 1 covers Chapters 1-5. If you come 10 minutes early, I let you start 10 minutes early if you wish to have more time.
Lecture #9 also on Wednesday, February 22: Chapter 6 – Interest Rates and Bonds
Discussion Section #5 – Friday, February 24
Sunday, February 26: Suggested due date for the fifth Connect assignment from Chapter 6. This assignment is graded. But best to do the assignments closest to the chapter we are studying.
WEEK 6: Lecture #10 on Monday, February 27: Chapter 6 (continued) – Bond Features, Bond Types, and Yield Curves
Lecture #11 on Wednesday, March 1: Chapter 7 – Equity Markets and Stock Valuation
Discussion Section #6 – Friday, March 3
Sunday, March 5: Suggested due date for sixth Finance Connect assignment from Chapter 7. This assignment is graded. Again, the final due date is May 19 at Midnight.
WEEK 7: Lecture #12 on March 6: Chapter 7 (continued) – Preferred Stocks, Primary Markets, and Secondary Markets for Equities. I expect that I will have a Sayeda Shefa give my lecture as I will be on a field trip with another class.
Lecture #13 on Wednesday, March 8: Chapter 8 – NPV is Net Present Value and IRR is Internal Rate of Return. Friday, March 10 is my birthday. What age am I? Well, you’ll have to do some math. I was born in 1953. [No one ever promised that there would be no math in a finance class. Use your calculator.]
Discussion Section #7 – Friday, March 10
Sunday, March 12: Suggested due date for seventh assignment from Finance Connect from Chapter 8. This assignment is graded. Due for real is on May 19.
WEEK 8: Lecture #14 on Monday, March 13: Chapter 8 (continued) – Capital Budgeting and Capital Rationing
Lecture #15 on Wednesday, March 15: Chapter 9 – Making Investment Decisions
Discussion Section #8 – Friday, March 17
SPRING RECESS: March 19-26
WEEK 9: Lecture #16 on Monday, March 27: Chapter 9 (continued) – Sensitivity Analysis of Capital Projects and Managerial Options
Lecture #17 on Wednesday, March 29: Chapter 10 – Lessons from Capital Market History
Discussion Section #9 – Friday, March 31
Sunday, April 2: Suggested due date for ninth Finance Connect assignment based on Chapter 10. This assignment is graded. Due for real on May 19.
WEEK 10: Lecture #18 on Monday, April 3: Chapter 10 (continued) Capital Market Efficiency and review for Midterm #2 later this week.
Wednesday, April 5 is our MIDTERM #2 in class. I you want more time, I will start ten minutes early. Midterm 2 covers Chapters 6-10.
Discussion Section #10 – Friday, April 7
There is no suggested Connect assignment due on Sunday, April 9.
WEEK 11: Lecture #19 on Monday, April 10: Chapter 11 – Risk and Return
Lecture #20 on Wednesday, April 12: Chapter 11 (continued) – The Security Market Line and CAPM (The Capital Asset Pricing Model)
Discussion Section #11 – Friday, April 14
Sunday, April 16: Suggested due date for the tenth Finance Connect assignment from Chapter 11. This assignment is graded. The real due date now is May 19 at Midnight.
WEEK 12: Lecture #21 on Monday, April 17: Chapter 12 – The Cost of Capital
Lecture #22 on Wednesday, April 19: Chapter 12 (continued) – Some methods for finding the cost of capital for projects not similar to the whole firm.
Discussion Section #12 – Friday, April 21
Sunday, April 23: Suggested due date for the eleventh Finance Connect assignment from Chapter 12. This assignment is graded. The real due date is May 19.
WEEK 13: Lecture #23 on Monday, April 24: Chapter 13 – Leverage and Capital Structure
Lecture #24 on Wednesday, April 26: Chapter 13 (continued) – An Optimal Capital Structure?
Discussion Section #13 – Friday, April 28
Sunday, April 30: Suggested date for the twelfth Finance Connect assignment from Chapter 13. This assignment is graded. Due for real on May 19.
WEEK 14: Lecture #25 on Monday, May 1: Chapter 14 – Dividends and Dividend Policy
Lecture #26 on Wednesday, May 2: Chapter 14 (continued) – Stock Dividends & Splits
Discussion Section #14 – Friday, May 4
Sunday, May 7: Suggested due date for Thirteenth Finance Connect assignment from Chapter 14. This assignment is graded. Due May 14.
WEEK 15: Lecture #26 on Monday, May 8: Should firms repurchase their shares?
Lecture #27 on Wednesday, May 10: Review for our Final
Friday, May 12: This is the University Study Day. No classes. No Discussion sections.
FRIDAY, May 19: is our FINAL EXAMINATION in class from 12:30 – 2:30pm as is assigned by UWM, but I typically start 10 minutes early if you want more time at 12:20am. The Final covers Chapters 11-14.
Friday, May 19 is 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.