Finance 3715: Business Finance Fall Semester 2001 Louisiana State University Professor: Dr. Tom Arnold Office: CEBA 2155 Section 7: CEBA 1111 Phone: (225) 578-6369 Final: 12/10 7:30-9:30 AM e-mail: [email protected] Office Hours: Tuesday and Thursday 10:00 AM to 11:30 AM Text (Required): Fundamentals of Corporate Finance (fifth edition) by Ross, Westerfield, and Jordan, Corporate Finance: A Valuation Approach (first edition; Chapters 2 and 4), Wall Street Journal (recommended) Calculator: A financial calculator is required for this course with the following three models recommended: TI BAII Plus, HP 10-B, and HP17-B. However, the teaching method will consist of equations and not calculator functions. The mastery of the given calculator is solely the burden of the student! Course Objectives: The course objectives are to develop the analytic skills, logical thought processes, and information literacy necessary to make and implement strategic corporate financial decisions in a global environment. The course will stress the impact of a global economy and the legal, social, technological, and ethical considerations on efficient economic outcomes. Students will develop effective written and technical skills required to effectively implement financial decisions in the corporation. Upon successful completion of this course, students will have developed an understanding of firm organization, principal-agent relationships, fundamental financial analysis, short-term working capital management, risk/return relationships, time value of money (TVM), valuation, and capital budgeting, as they relate to the financial management of the firm and its interactions with financial markets. Students will also obtain institutional knowledge of how financial markets function and the role of financial markets in a free market economy. Grading: There are three exams (the final being the third exam) during the semester. Each exam is worth 25% of the grade. Exams during the semester will consist of a computational component and a multiple choice component without a formula sheet. No particular exam is meant to be cumulative but the course material is cumulative by nature. Thus, a given exam will utilize the material from previous exams. The best four of five homework assignments are each worth 6.25% of the grade (i.e. the remaining 25% of the final grade). The grading scale is as follows: A: 90.00% and above B: 80.00% through 89.99% C: 70.00% through 79.99% D: 60.00% through 69.99% F: 59.99% and below Grades will not be altered due to “end of semester regret” or avoidance of “parental retribution”.Testing: Exams are given to assess the student’s knowledge of the given material. If a student is unable to take a particular test at its appointed time and date, the instructor must be notified ONE WEEK PRIOR to the test. If the student does not honor the previous directive, a grade of zero will be assessed for that exam. Assignments: Five assignments consisting of problems and/or computer projects (using EXCEL) are given throughout the semester. These assignments are due in my office at 11:00 AM on the assigned day. Late assignments will not be accepted! The best four grades on these assignments will compose 25% of the final grade. Assignments are always available on the course web page on Blackboard. Thus, the student may miss or perform poorly on one and only one assignment. Do not use this opportunity frivolously! Office Hours: Office hours are on Tuesdays and Thursdays between 10:00 AM and 11:30 AM. Appointments can be made outside of these stated hours with 24 hour notice. WARNING: Office hours are not to be used to retrieve missed class notes. Cheating: Do not try to cheat on tests or assignments because you will be caught and the maximum allowable penalty for the offense will be exacted. If cheating is suspected, the matter is simply given to the Dean of Students for possible prosecution. The instructor has been at this for a long time and has successfully prosecuted students in the past. It’s very simple- do your own work. On assignments, feel free to talk to your peers but your work must be your own! If there is any confusion consult the Honor Code or the instructor. Some Advice: The best advice is to have the right attitude and work ethic. Coming to class and sitting slumped over copying notes is as effective as a night watchman sleeping at the post. Yes, the watchman is on the job but is not doing the job. Be ready for class and give the class the appropriate amount of attention long before the night prior to an assignment’s due date or exam date. Finally, if you are in this course “merely to survive”, you are dead already. Give the class the effort and you may be amazed at the reward! Course Requirements and Prerequisites: All students should have already successfully completed all prerequisites for this class, including all required math, statistics, economics, and accounting courses, such as ECON 2020 or 2030, ISDS 2000, and ACCT 2021 or 2101 (concurrent registration in ACCT 2021 or 2101 is satisfactory).The Material to be covered: Week: Subject: Exam/Assignment: Chapters: Aug. 28th and 30th - Overview - Income Statement and Balance Sheet Chapters 2, 3, 4, and 18 (RWJ) Chapter 2 (BS) Sep. 4th and 6th - Financial Statement Analysis Chapters 2, 3, 4, and 18 (RWJ) Chapter 2 (BS) Sep. 11th and 13th - Financial Statement Analysis Assignment 1: Mon. September 10th Chapters 2, 3, 4,and 18 (RWJ) Chapter 2 (BS) Sep. 18th and 20th - Time Value of Money - Pro Forma Analysis Chapter 5 (RWJ) Chapter 4 (BS) Sep. 25th and 27th - Market Structure - Treasury Securities Assignment 2: Mon. September 24th In Class Notes Oct. 2nd and 4th - Review for Test Test 1: October 4th All Previous Material Oct. 9th and 11th - No Class on October 11th for Fall Break Chapter 4 (BS) Oct. 16th and 18th - Time Value of Money - Bonds and Annuities Chapters 5, 6, 7, and 8 (RWJ) Oct. 23rd and 25th - Stock Valuation - Holding Period Value Assignment 3: Mon. October 22nd Chapters 5, 6, 7, and 8 (RWJ) Oct. 30th and Nov. 1st - Introductory Statistics Assignment 4: Wed. March 21st In Class Notes Nov. 6th and 8th - Review for Test Assignment 4: Mon. November 5th Test 2: November 8th All new material Nov. 13th and 15th - Portfolio Theory - CAPM Chapters 12 and 13 (RWJ) And