Schulich School of Business

York University
Course Outline

FINE 2000T :030, Introduction to Corporate Finance Class Day: Mondays & Wednesdays, 10:00 am to 11:30 am Room: SSB W136 Term: Winter, 2012 Outline: http://athena.ssb.yorku.ca/course_material/W2012/CMD/FINE2000T.nsf Instructor:
George Klar, CFA gklar@schulich.yorku.ca Room N203G Office hours: Mondays & Wednesdays, by appointment only Secretary Stephanie Peca N204A, Seymour Schulich Building speca@schulich.yorku.ca (416) 736-2100 ext. 44557 Brief Description Students learn about investment and financing in this core course. The investment decision allocates scarce resources to projects in the organization, and involves asset valuation, capital budgeting, risk management, working capital management and performance assessment. The financing decision chooses sources of cash to finance the investment decisions and involves capital structure, financial instruments, the risk-return trade-off, financial planning and the cost of capital. Ethical considerations and management in the global context are integrated into these topics. Prerequisite: none Course Credit Exclusion AP/ECON 4400 3.00 (AS/ECON 4400 3.00 or AK/ECON 4082 3.00) Course objectives: The course objectives are to introduce students to the theory of financial management and its application to the business world. It analyzes how financial managers make decisions within a framework which emphasizes the time value of money (TVM) and the relationship between expected return and risk. In addition, we examine the techniques that financial managers use to evaluate feasibility of undertaking new projects (i.e., capital budgeting). This course is very fast paced, technical in nature, and it requires each student to do considerable out-of-class work. Problem solving throughout the course is required.

Organization of the Course:

Class format is lecture with discussion and analysis of real time events. Students are expected to prepare for class by having read the assigned readings, and maintained a regular reading of newspapers about the capital markets.

Assigned Reading:
Required reading for this course includes the following book. It is available for purchase from the York University bookstore. Other readings are available on-line: Fundamentals of Corporate Finance, 4th Canadian Edition; Brealey, Myers, Marcus, Maynes & Mitra, McGraw-Hill Ryerson, 2009 Required Newpapers: Must should the National Post, Globe & Mail and Economist, plus other on-line publications. We will review interesting articles from these publications from the previous week and examine their implications. Evaluation of Student Performance: The course grading scheme for undergraduate courses conforms to the 9-point system used in other undergraduate programs at York. The possible course letter grades for a course (and the corresponding grade points awarded for each grade are: A+ A B+ B C+ C D+ D F 9 grade points 8 7 6 5 4 3 2 0

(Students are reminded that they must maintain a cumulative GPA of at least 5.0 to remain in good standing and continue in the program, and to qualify for their degree. Schulich grading guidelines mandate a section GPA of between 5.5 and 7.0.) Where instructors use numerical or percentage grades, Schulich grading policy does not require a preset translation of percentages into specific letter grades. In this class, final letter grades will be determined by the following process: Grade Evaluation: Quiz #1 (45 min.) Quiz #2 (45 min.) Midterm Exam....... Final Exam............ Total...... 10% 15% 30% 45% 100%

Any student who obtains less than 50% weighted average on the examinations may not pass the course. There are 2 exams: (i) a Midterm and (ii) Final. If you miss the Midterm and have

submitted a properly completed Attending Physician Statement (APS), then your Final exam will be re-weighted upward and will now be worth 75% of your final course grade. Quiz: There are 2 Quizs during the term and both held in-class. On these days, a lecture will also be given in the balance of the available time. The first Quiz (10% weight) is designed to ensure you have mastered some early concepts and can apply these using your calculator. If you miss Quiz #1 and a valid APS is received, the weight of Quiz #1 will be transferred to your Mid-Term Exam and thus, the Midterm will be worth 40%. Quiz #2 (with a 15% weight) deals with more advanced financial issues. If you miss Quiz #2 and a valid APS is provided, the weight of Quiz #2 will be transferred to the Final Exam (thus, the Final Exam is worth 60%). Exams: Midterm exam: A 90-minute Mid-Term exam will be held mid-way through the term. You will be provided with a formula sheet as part of the exam booklet. You must bring a nonprogrammable calculator with no text capabilities. No books, notes, phones or computers are allowed during the exam. Final Exam: The final exam will be 3 hours long and will cover the entire course. You will be provided with a formula sheet as part of the exam booklet. You must bring a nonprogrammable calculator with no text capabilities. No books, notes, phones or computers are NOTE: Any student who misses 3 or more of the Quizs or Exams will automatically be deemed to have not fulfilled the course requirements and will receive a grade of Incomplete (I). Academic Honesty: Academic honesty is fundamental to the integrity of university education and degree programs. The Schulich School will investigate and will act to enforce academic honesty policies where apparent violations occur. Students should familiarize themselves with York Universitys policy on academic honesty. It is printed in full in your student handbook and can also viewed on-line on the Schulich website, clicking through as indicated: Schulich website Programs Masters Degree Learn More Academic Policy While academic dishonesty can take many forms, there are several forms of which students should be highly aware because they are the ones that are most likely to occur in the context of a specific course. [1] Plagiarism. Plagiarism is the presentation of information, ideas, or analysis generated by other people as being your own. It includes direct quotations as well a substantive paraphrases where the course of that information or idea is not clearly identified to the reader. Students should be careful to present their written work in a way that makes it completely clear in each and every cases where a quotation, a paraphrase, or an analysis is based on the work of other people. (This includes information from all sources, including websites.)

[2] Cheating. Cheating is an attempt to gain an unfair advantage in an evaluation. Examples of such violations include (but are not limited to) consulting prohibited materials during an examination or copying from another student. [3] Failure to follow limitations on collaborative work with other students in preparing academic assignments. Each class differs in the mix of assignments and group-versusindividual preparation that is allowed. The instructor will make clear the extent of collaboration among students that is acceptable among students on various pieces of assigned work. Students should abide by those limitations and, if they are unsure about whether a certain level or form of collaboration would be acceptable, to clarify that question with the instructor in advance. [4] Aiding and abetting. A student is guilty of violating academic honesty expectations if he/she acts in a way that enables another student to engage in academic dishonesty. If a student knows (or should reasonably expect) that an action would enable another student to cheat or plagiarize, that students action constitutes an academic honesty violation. Illustrative examples include making your exam paper easily visible to others in the same exam or providing your own working or finished documents for an individual assignment to another student (even if that other student said that he/she just wanted to get an idea of how to approach the assignment or to check whether they had done theirs correctly). [5] Use of academic work in more than one course. Generally, academic work done for every course is new work, done for that course only. If a student wishes to use some or all of the academic work done for an assigned task in one course in another course, the student must get explicit, prior permission from both instructors so that they agree that the scope and nature of the overlapping use of that work is such that it can fairly be counted toward both courses. Other information: Use of laptops, cellphone, PDAs, Blackberrys, are NOT allowed in the lecture room. They MUST be turned off. Repeated interruptions by your smartphone may lead to it being confiscated for the duration of the class. I will post lecture slides before the class and materials to the CMD. Review all material before the lecture. Be prepared to participate and engage in discussion. Calculator: Every student must have a hand-held calculator that has Time Value of Money functions and you will need to be able to use your calculator effectively. Some examples of calculators you may wish to purchase include; The Sharpe EL 733A (or later) model, or the Texas Instruments BAII Plus or the Hewlett Packard HP10, are all good choices. (Look for n, i or I/Y, PMT, PV, FV, CF, IRR and NPV functions).

Punctuality and decorum: Lectures will start at the indicated time, sharp. Students are expected to be on time. If you are uncharacteristically late due to unforeseen circumstances, please take a seat at the back of the class and try not to disturb anyone. Students are asked to remain in the class for the duration of the lectures and not to leave the classroom and/or come back and forth at will. If you must leave early occasionally, please have the courtesy to let me know in advance.

Email protocol: As I teach several different courses and sections, it is essential that the following email protocol be observed: Email me from your Schulich email account (username@schulich.yorku.ca) under all circumstances Use the email address at the top of this course outline only On the subject line, provide your course code (FINE2000) and section (e.g., Sect. X) and a brief description of the purpose of your email To receive a response to your email, sign your email with your full name and student number Consolidate your queries into a single email Provide your attempted solution to exercises and problems when seeking help

Schedule of Topics and Readings:

The following list of lecture topics and readings indicate the material to be read, reviewed and/or prepared for the various class sessions. If any changes in this schedule become necessary, notifications will be posted in the course CMD, and where such changes need to be announced between class sessions, an email will be sent to students Lotus Notes email accounts, notifying them of the change. The topic order is stated below and is a guideline only. The instructor reserves the right to alter the schedule as needed.

Prof. Klar / FINE 2000T / 10:00 am Room W136

Lecture
1 2 3 4 5 6 7 8 9 10 11 12 13 No Classes 14 15 16 17 18 19 20 21 22 23 24

Date
Jan. 4, Wed Jan 9, Mon Jan 11, Wed Jan 16, Mon Jan 18, Wed Jan 23, Mon Jan 25, Wed Jan 30, Mon Feb 1, Wed Feb 6, Mon Feb 8, Wed Feb 13, Mon Feb 15, Wed Feb. 20-24 Feb 27, Mon Feb 29, Wed Mar 5, Mon Mar 7, Wed Mar 12, Mon Mar 14, Wed Mar 19, Mon Mar 21, Wed Mar 26, Mon Mar 28, Wed Apr 2, Mon Apr 4-20

Topic and Textbook Material

Introduction to Corporate Finance - Chapters 1 & 2 Review of Accounting and Finance - Chapter 3 Financial Statement Analysis - Chapter 17 Financial Statement Analysis - Chapter 17 (cont) Time Value of Money ("TVM") - Chapter 4 TVM (cont) Bonds - Chapter 5 & QUIZ #1 (worth 10%; covers Ch. 3, 4, 17) - 45 min. Bonds (cont) Stocks - Chapter 6 Stocks (cont) & Corpt Financing - Chapter 13 (sections 13.2-13.5 only) Net Present Value ("NPV") & Other Criterion - Chapter 7 Net Present Value & Other Criterion - Chapter 7 (cont) MID-TERM EXAM (worth 30%; covers Ch. 1-6 & 13, 17) - 90 min. **** BBA Reading Week **** Discounted Cash Flow Analysis - Chapter 8 DCF (cont) Project Analysis - Chapter 9 Introduction to Risk and Return - Chapter 10 Risk (cont) & QUIZ # 2 (worth 15%; covers Ch. 7-9) 45 min. Risk, Return & Capital Budgeting - Chapter 11 Risk, Return & Capital Budgeting - Chapter 11 (cont) Cost of Capital - Chapter 12 Cost of Capital - Chapter 12 (cont) How Corporations Issue Securities - Chapter 14 Review & catch-up FINAL EXAM (Date TBA) 3 hours

Last revised: 21/12/2011