MSF 643: Financial Economics and Statement Analysis
Course Instructor:
Office Number:
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Course Meeting Times:
Course Website: Canvas
Course Objectives
The objective of this course is to teach students how to apply modern financial theory to the investment and financing decisions of a corporation by providing them with the fundamental analytical tools of corporate finance. We will be focusing on topics like capital budgeting, security valuation, portfolio theory, asset pricing, and cost of capital throughout the course. We will start from the ground up and attain to a full-fledged company valuation by the end of the course. Although numbers and formulas will be an important part of the course, the main goal is establishing a solid grounding in some of the basic concepts in finance and developing skills to apply those concepts into financial management and decision-making. Class meetings will be mostly based on lecture notes which will be posted prior to each meeting. Each class member is expected to be well prepared for each session and to actively participate in class discussions through which I hope we can learn as much as possible in the weeks we will spend together.
Course Material
The required textbook for the course is:
Ross, Westerfield, Jaffe and Jordan, Corporate Finance, 12th Edition, McGraw-Hill/Irwin, 2019 (RWJJ)
Other resources:
- A financial calculator (e.g., Texas Instruments BA II Plus) is required and should be brought to class on a daily basis.
- A subscription to The Wall Street Journal is also encouraged (or other finance-oriented publication like Business Week, Financial Times, etc.).
Grades
Your total course grade will be determined as follows:
| Problem Set Assignments | 30% |
| Mini-Cases | 20% |
| Final Exam | 50% |
Final Exam
There will be an in-class, two-hour final exam on TBD. The final exam will be a combination of multiple choices and short answer problems. The exam will be closed book, closed notes. You can use a financial calculator. There will be no make-up final exam. In the event that a student is unable to attend the exam, it is his/her responsibility to notify me prior to the exam, with reasonable notice. Only in extraordinary circumstances, the student may be authorized to take the exam on a different date.
Problem Set and Mini-Case Assignments
There will be six problem sets and two or three mini cases to be completed individually. Part of the final exam will be taken either directly or slightly modified from the problem sets, so it is important that you do homework problems. You need to submit your assignments via Canvas by the due day. Late submissions will not be accepted without prior notice.
Class Participation
I will not take attendance; however, your attendance and participation are extremely important. This is NOT a “read-notes and learn-by-yourself” type of course and you should actively listen to the lectures and participate in class discussions if you want to learn the material and succeed in this class.
Final letter grades for the course are determined by the following table:
| Grade | Range |
| A+ | >=97.0 |
| A | 93.0-96.9 |
| A- | 89.0-92.9 |
| B+ | 86.0-88.9 |
| B | 83.0-85.9 |
| B- | 80.0-82.9 |
| C+ | 75.0-79.9 |
| C | 70.0-74.9 |
| D | 60.0-69.9 |
| F | <=59.9 |
Program-Level Learning Goal
Analytical Decision Making: Demonstrate the ability to analyze uncertain complex management situations using appropriate tools, techniques and information systems for decision-making.
Tentative Course Outline (Sample)
| Date | Topics | Readings | Assignments |
| Week 1 | Financial Statements Analysis | RWJJ 2, 3 | |
| Week 2 | Capital Budgeting | RWJJ 5 | Problem Set 1 |
| Week 3 | Capital Budgeting | RWJJ 6 |
Problem Set 2 Mini-case: New Economy Transport |
| Week 4 | Bond Valuation | RWJJ 8 | Problem Set 3 |
| Week 5 | Stock Valuation | RWJJ 9 |
Problem Set 4 Mini-case: Reeby Sports |
| Week 6 | Return and Risk, CAPM | RWJJ 11 | Problem Set 5 |
| Week 7 | Cost of Capital | RWJJ 13 |
Problem Set 6 Mini-case: Sangria |
| Week 8 | Final Exam (It is a two-hour exam but I can give you extra 40 minutes to 10pm.) |
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