Corporate Finance by fjzhangweiyun

VIEWS: 2 PAGES: 17

									  Business 3019
Course Introduction

   Corporate Finance

         2007
         Corporate Finance


• course prerequisite - 2039
• required texts:
   – Corporate Finance by Jonathan Berk and Peter
     DeMarzo (2007)
   – Cases in Financial Management: Fourth Edition. By
     Stephen Foerster, et. al. (2003)
• other reading materials as announced in class.
• Course material found on the web site:
          http://foba.lakeheadu.ca/hartviksen/5051
      Corporate Finance – Evaluation 2007



Class Attendance                                 10%
Participation                                    10
Group Classroom Case Presentation                15
Group Hand-in Assignment # 1 (due January 31)    15
Group Hand-in Assignment # 2 (due March 14)      15
Mid-term Test (February 14, 2007)                15
Final Examination                                20
TOTAL                                           100%
    Topics to be Covered
•   Tools of corporate Finance
     –   Time value of money, EAR
     –   Stock and bond valuation, yield to maturity
     –   NPV, IRR, PI, discounted payback, MIRR
     –   Financial analysis
     –   Financial forecasting
     –   Cash budgeting
     –   Breakeven analysis
     –   Indifference analysis
     –   EVA
•   Theories of corporate FinanceCapital Budgeting and Project Analysis and
    Evaluation
     –   Principal-agency theory
     –   Asymmetry information theory
     –   Signaling theory
     –   Risk and return – CAPM, APT
     –   Cost of capital
     –   Bankruptcy, reorganization and liquidation
     –   Capital structure theory and policy
     –   Dividend policy
   The Text


• use as a reference/resource
  –   list of symbols and formulae (inside covers)
  –   table of contents/subject index
  –   financial tables
  –   glossary
  –   self-test problems with solutions
  –   summary and key concepts at the end of each Chapter
  –   Remember, there is a Study Guide available in the bookstore

• use the questions provided at the end of
  each chapter as your follow-up review.
   Expectations


• class attendance and participation
• current events/class discussion
• before each class:
   – read the Chapter
   – answer the questions for yourself
   – prepare the solutions to the assigned chapter problems

• bring your questions to class
• you will be responsible for the additional
  information covered during each class as well as
  all assigned material.
      Class Presentations


• Please consult the course outline and carefully
  review the evaluation form posted on the course
  website.
• Carefully plan your presentation:
  – Review the underlying concepts and relevant
    definitions
  – Engage the class
  – Challenge the class
  – Review the important concepts
         Tests and Exams


•   short-answer questions/problems
•   One crib sheet allowed for formula only
•   financial tables will be provided
•   definitions
•   small cases (particularly on the final)
          Hand-in Assignments

• You must follow the directions found in the course outline.
• Significant marks will be allocated for format on each and
  every assignment:

   –   Title page
   –   Electronically-generated table of contents based on styles
   –   Headers and footers
   –   Electronically generated page numbers
   –   Use of MS Equation for mathematical expressions
   –   Spelling and grammar
   –   Organization
   –   Spreadsheet modeling
 Corporate
Finance - In
  Review

  Key concepts
         Risk and Return



         0.12
          0.1
         0.08
Return




         0.06
         0.04
         0.02
           0
                0    0.5              1       1.5
                    Risk (Beta Coefficient)
         Risk and Return
                    The Capital Asset Pricing Model


                                                      Security Market
         0.12
                                                      Line
          0.1
         0.08
Return




         0.06
         0.04
         0.02
           0
                0         0.5             1               1.5
                        Risk (Beta Coefficient)
          Security Valuation

• market values are a function of:
  – magnitude
  – timing
  – riskiness
     of the expected (forecast) cashflows

      $ = price paid today


             1      2     3                            Time

      0      $            $
                   $
          Cash flow returns expected in return for the initial
          investment.
         Securities

•   bonds
•   preferred stock
•   common stock
•   derivatives
    – rights/warrants/convertibles
    – exchange-traded options
         Other Topics


•   agency theory
•   income taxation
•   financial institutions and markets
•   cost of capital
•   capital budgeting
•   dividend policy
•   capital structure
          Why Study Finance?

• anyone willing to guess?
   – job opportunities
         private and public corporations
         entrepreneurial opportunities
         financial institutions (brokerage houses, investment houses, banks, trust
          companies, insurance companies, regulators)
         government
         corporate sector
   – jobs
         financial advisor
         registered representative (broker)
         financial analyst
         risk manager
         portfolio manager
         chief financial officer
       Why Study Finance?

• pursue professional designations upon
  graduation:

  • CFP - certified financial planner
  • CFA - chartered financial analyst
  • FCSI - fellow of the Canadian Securities
     Institute
  • CMA - Certified Management Accountant
  • many others in valuation, accounting, etc.

								
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