# Course Review - Conclusion

Document Sample

```					Business 2039 – Finance II

Conclusion

Prepared by
Ken Hartviksen
Finance II – Course in Review
Course Introduction

Course Orientation
 Introduction to course and expectations
 Hand-in assignment expectations
 How to access and use on-line course related
resources
 How to access and use on line resources related
to finance
     SEDAR

Week 1 reviewed       Forecasting   Time Value   Interest Rates   Valuation
Topics in Review
1. What does a financial manager do?
2. Financial Forecasting
   Percentage of Sales Method
3. Working Capital Management
   Cash Flow Cycle
   Implicit cost of not taking a trade discount
   Cash Budgeting – cash management
4. Introduction to Return, Risk and Portfolio Theory
   Holding period returns
   Arithmetic versus geometric mean returns
   Measures of risk – range, variance, standard devation,
coefficient of variation
   Returns and risk in portfolios
Topics in Review

   Modern Portfolio Theory
   Capital Asset Pricing Model
   Ex ante beta coefficient
   Ex post beta coefficient
   Cost of Capital
   Market value weights
   After-tax and after-floatation cost of debt
   Cost of retained earnings
   After-floatation cost of equity
   Investment opportunity schedule
   Introduction to Capital Structure
Topics in Review

   Capital Structure
   Operating versus financial leverage
   D.O.L., D.F.L., D.C.L.
   Break even analysis
   Indifference Analysis – (EBIT/EPS Analysis)
   M&M capital structure theory (with and without
taxes)
   Present value of financial distress, agency,
bankruptcy costs
   Direct and indirect costs of bankruptcy
   Pecking order theory
   CCAA and BIA
Topics in Review …

   Dividend Policy
   Responsibilities of Boards of Directors
   Time line – ex dividend date
   Types of dividends
   Stock dividends versus stock splits
   DRIPs
   M&M’s dividend irrelevance argument
   Reasons for the relevance of dividends
 Transactions costs
 Signalling (information asymmetry)
 Taxes – clientele effect
   Residual dividend policy
   Myron Gordon’s “Bird-in-the-hand” Theory
Topics in Review …

   Market Efficiency
   Types of market efficiency
   Technical versus fundamental analysts
   Value versus growth investors
   Efficient market hypothesis
 Weak form EMH
 Semi-strong form
 Strong form
   Tests of market efficiency
   Anomalies
   Random walk hypothesis
   Behavioural finance
   Implications of market efficiency for investors and
financial managers
Finance II

   This course has focused on some of the most
important theories that form the core of
corporate finance
   Portfolio Theory
   CAPM
   Cost of Capital
   Capital Structure
   Dividend Policy
   Market Efficiency

   Finance II is the prerequisite for most senior
Core Courses
 3059 – Investment management

 3019 – Corporate finance

 4039 – Financial Institutions Management

 4079 – International Financial Management

Optional Courses
 4099 – Personal Financial Planning

 4119 – Derivative Securities

 4139 – Risk Management and Insurance
The Final Examination

   June 16, 2012 – 1:00 pm – ATAC 1010
   Three hours in duration
   16 questions
   Chapters 23, 8, 9, 20, 21, 22, 10,(11,12 in brief), 17
   Bring
    one 8 by 11 inch crib sheet (formula only) both sides
    Silent non-programmable calculator
    Sufficient writing instruments
    Ruler
   You must hand-in at the end of the exam
1.   Exam booklets
2.   Exam questions