NATIONAL UNIVERSITY OF SINGAPORE NUS Business School Department of Finance Course Outline BMA 5008, FINANCIAL MANAGEMENT Term 1, 2009-2010 P1/P2 class : Mon/Tue 6 to 9 p.m. Classroom : P1 - HSSML Conference Room; P2 3 Conf. Room F Instructor: Ravi Jain E-Mail: firstname.lastname@example.org Phone: 6516-7947 Office: BIZ 2, 03-35 Office Hours: Mon/Tue/Fri 5-6 pm Other times on walk-in basis but appointment is preferred Course Description and Objectives This course will provide a strong conceptual foundation for finance.
Finance theory will be used to solve practical problems faced by financial managers. You will find it beneficial to have some basic knowledge of accounting, algebra, and statistics prior to enrolling in this course. By the end of this course you should be able to: " Understand the conflicts between shareholders and managers " Understand the time value of money and calculate present value " Value bonds and stocks " Estimate cash flows for a project " Calculate the cost of capital for projects and companies " Use the net present value rule to evaluate a project " Measure the risk of individual securities and portfolios " Analyze a firm 9s capital structure " Set payout policy of a firm " Understand call ... more. less.
and put options Course Format The lectures will focus on the major points introduced in the textbook.<br><br> The lectures will provide general background information on the topics covered and may not necessarily be specific to the homework/case assigned. You are expected to access the course page on IVLE (ivle.nus.edu.sg) for course related information including announcements and PowerPoint slides of the lectures. Students are also encouraged to actively participate in the forum on IVLE to discuss course related and general investments related issues.<br><br> Prior to class you should read the relevant material in the textbook, the PowerPoint slides, and any additional assigned readings. Although I do not explicitly grade for class participation, you are encouraged to ask questions and to be an active participant in class. You are expected to attend class regularly and to come to class on time.<br><br> After the lecture, you should review your lecture notes and work on the assignments. Textbook The textbook for this course is Principles of Corporate Finance , Richard A. Brealey, Stewart C.<br><br> Myers, and Franklin Allen, 9th Edition, McGraw-Hill, International Edition. You may refer to the textbook 9s Online Student Resource Center, which contains a lot of useful information ( http://highered.mcgraw-hill.com/sites/0073286982/student_view0/index.html ). Assessment Your grade will be based on your performance in homework assignments (10%), two case assignments (20%), a mid-term examination (30%), and a final examination (50%).<br><br> The homework and case assignments are to be done by groups of approximately four to five students. Homework You will be asked to do a series of homework assignments. At the end of the term I will grade only two randomly selected assignments.<br><br> Failure to turn in an assignment (even one which is not eventually graded) by the deadline will result in a penalty. Case Each group is expected to submit a case memorandum for the two cases that we will discuss in class. The case memorandum should be a maximum of two pages (typed and double- spaced) for the write-up and a maximum of three pages for any supporting tables/graphs/exhibits.<br><br> More details on the case assignment will be provided in a separate document. Examinations The examination format will likely be a combination of multiple-choice questions, fill-in-the- blanks, long problems, and essay-type questions. These questions will be designed to test your analytical and problem solving skills, and your knowledge of conceptual and qualitative material.<br><br> The final examination will be cumulative but will emphasize topics covered after the mid-term exam. If you are not satisfied with your grade on an exam or an assignment, you may ask for your analysis to be re-graded, giving detailed and substantial justifications for your request. Bear in mind that if I accept your request and re-grade your exam or assignment, you can be given the same grade, a higher grade or a lower grade than originally assigned.<br><br> Contact Information In general, you may meet me at any time I am in my office. However, to ensure that I am available to talk to you during non-office hour times, I recommend that you make an appointment. No appointment is necessary if you plan to see me during the scheduled office hours.<br><br> I encourage you to contact me through email. I usually check my email several times a day during weekdays; slightly less frequently on weekends. Detailed List of Topics The following is a detailed list of some of the major topics that are proposed to be covered in this course.<br><br> Based on the progress of the class, minor changes (additions or deletions) may be made to this list. Introduction to finance " What is a corporation? " The objectives of a firm " What is the role of a financial manager?<br><br> " Separation of ownership and management Valuation " Introduction to present value " The opportunity cost of capital " Valuation of stocks and bonds Capital Budgeting " Making investment decisions with the Net Present Value (NPV) rule " NPV vs. alternative criteria for making investment decisions such as the Internal Rate of Return Rule and Payback Period Rule " Estimation of cash flows and valuing a project using discounted cash flows " Equivalent annual costs Risk, Return, and Cost of Capital " The benefits of diversification " Measures of risk for individual securities and portfolios " Estimation of beta " Capital Asset Pricing Model and alternative pricing models " The cost of equity " The weighted average cost of capital (WACC) " Project cost of capital Market Efficiency " The lessons of market efficiency " Three forms of market efficiency " Stock market anomalies and behavioral finance Corporate financing " Financing a company using common stock, preferred stock, and debt " How corporations issue securities " Venture capital " Initial public offerings (IPOs) Payout policy " How dividends are paid and how firms repurchase stock " The payout controversy " Dividends and taxes Capital Structure " How much should a company borrow? " The trade-off theory of capital structure " The tax benefit of debt " The costs of financial distress " The pecking order of financial choices Introduction to Options " Call and put options " The determinants of option value<br><br>