Financial Theory & Practice FINN 3226-021 2 nd Summer 2017 Time: 9:45 to 11:15 a.m. (MTWTF) Location: Friday 123 Instructor: Charles Teague (Office: Friday 290C) Contact: ceteague@uncc.edu Office Hours: 8:30 to 9:45 a.m. (Tues/Thus) (or by appointment) Required: Texts (1) Financial Management: Theory and Practice, 14th Ed., by Eugene Brigham and Michael Earnhardt, South-Western, Cengage Learning, 2014. (2) Financial Calculator (HP 10bII+ or Texas Instruments BA II Plus) (required) Course Description The course deals with modern finance theory and its applications to corporate finance. The course will cover equilibrium asset pricing models, efficient markets hypothesis, risk analysis and real options theory in corporate decision making. The topics of informational asymmetry, optimal corporate structure and dividend policies will also be investigated in detail. Agency conflicts and their impact on corporate performance, financial restructuring and leasing policies will conclude the set of issues to be analyzed. Course Objective The objectives of the course are to ensure that all students have a mastery of the elements of corporate finance and are able to utilize the discussed theories and models to evaluate stocks, bonds, leases and to assess risk in the corporation. Students will be expected to measure cost of capital, make optimal capital budgeting decisions and to determine the best dividend policies and capital structures. They will also be expected to be able to assess agency costs and formulate plans for restructuring, if capital structures are incompatible with the objectives and resources of the firm. Grading You will be graded on in-class exams and a group project. You will be awarded a grade based on the total points earned from the project and the exams as follows: Exam 1: Exam 2: Corporate Analysis Project: Comprehensive Final Exam: Total: 600 Points
FINN3226 Financial Theory & Practice Page 2 Grading Scale A = 540-600 B = 480-539 C = 420-479 D = 360-419 F = 0-359 Extra Credit: You can earn (2) two extra semester GPA points (12 points on a 600-point scale) for perfect attendance. Important Dates Day Date Event Wed 7/05 First Day of Class Mon 7/17 Exam #1 Wed 7/26 Last Day to Withdraw Mon 7/31 Exam #2 Mon 8/07 Group Presentations/ Project Summary Due Tues 8/08 Group Presentations Wed 8/09 Final Exam (8:00 10:30 am) Academic Prerequisites To enroll in this course students must have (1) a declared major in the College of Business with (2) at least Junior standing (e.g., 60 or more earned semester hours), and (3) have completed the following prerequisite courses: FINN 3120 Introduction to Financial Management Absences from Examinations There will be no makeup or early examinations of any sort. The Final Examination must be taken at the scheduled date and time. If you cannot take the Final Examination for medical reasons, you will be awarded an "I" and can complete the course requirements the following semester. If you miss one midterm examination, your final examination will have a 300-point weight. If you miss two midterm examinations, you will be assigned an "F" for this course.
FINN3226 Financial Theory & Practice Page 3 Assignments and Lectures The principal method of instruction will be primarily by means of lectures. Students will be expected to actively participate in classroom discussions and the solving of problems. You should be prepared for class by reading the assigned chapters, before the class meets. Solving problems, reading the textbook, and participating in classroom discussions are ways in which you can work to improve your understanding of the course material. Students are expected to have a single, good non programmable financial calculator to assist them in solving assigned problems. Make sure that you know how to use your calculator as calculator use is your responsibility. Since corporate finance is a dynamic and constantly changing area, students are expected to keep abreast of current events in financial markets. This can be achieved by reading the Wall Street Journal, Business Week, or Economist, which are all good sources for current information. Important University and/or College Policies 1. ACADEMIC INTEGRITY: "All UNCC students have the responsibility to be familiar with and to observe the requirements of The UNCC Code of Student Academic Integrity (see the Catalog). This code forbids cheating, fabrication or falsification of information, multiple submission of academic work, plagiarism, abuse of academic materials (such as Library books on reserve), and complicity in academic dishonesty (helping others to violate the code). Any further specific requirements or permission regarding academic integrity in this course will be stated by the instructor, and are also binding on the students in this course. Students who violate the code can be punished to the extent of being permanently expelled from UNCC and having this fact recorded on their official transcripts. The normal penalty is zero credit on the work involving dishonesty and further substantial reduction of the course grade. In almost all cases, the course grade is reduced to "F". If you do not have a copy of the code, you can obtain one from the Dean of Students Office. Standards of academic integrity will be enforced in this course. Students are expected to report cases of academic dishonesty they become aware of to the course instructor who is responsible for dealing with them." 2. ATTENDANCE: Students are expected to attend punctually all scheduled sessions in the courses for which they are registered and are responsible for completing the work from all of the class meetings. Absences from class may be excused by the instructor for such reasons as personal illness, religious holidays, participating as an authorized University representative in an out-oftown event, or unavoidable professional responsibilities that require missing a class. Whenever possible, students are expected to seek the permission of the instructor prior to absences. 3. DISENROLLMENT: At the discretion of the department offering a course, a student may be dis-enrolled from a course section if he or she does not attend the first scheduled meeting of the section. The department chair has the responsibility for providing timely notification to the student who is dis-enrolled. 4. COURSE WITHDRAWAL: Under the UNCC Course Withdrawal Policy, students may withdraw from a course until the withdrawal deadline and the mark of "W" will be assigned. No withdrawals will be permitted after the course withdrawal deadline. It is the student's responsibility to determine by the withdrawal deadline whether to withdraw from the course or stay in for a grade. Students are expected to complete all courses for which they are registered at
FINN3226 Financial Theory & Practice Page 4 the close of the add/drop period. If you are concerned about your ability to succeed in this course, it is important to make an appointment to speak with me as soon as possible. Because University policy on withdrawal allows students only a limited number of opportunities available to withdraw from courses, it is important for you to understand the financial and academic consequences that may result from course withdrawal. 5. ELECTRONIC DEVICES IN CLASS: The use of cell phones, smart phones, or other mobile communication devices during class time is disruptive, and is therefore prohibited during class. Please silence you cell phones! Except in emergencies, those using such devices must leave the classroom for the remainder of the class period. Students are permitted to use computers during class for note-taking and other class-related work. Those using computers during class for activities not related to class must leave the classroom for the remainder of the class period. 6. DIVERSITY: The Belk College of Business strives to create an inclusive academic climate in which the dignity of all individuals is respected and maintained. Therefore, we celebrate diversity that includes, but is not limited to, ability/disability, age, culture, ethnicity, gender, language, race, religion, sexual orientation, and socio-economic status. Company Analysis Students will be assigned to 6 (or 7) groups of 6. Each group will have a different (SIC) industry so 6 (or 7) industries will be covered. Each group will pick their own company within their chosen industry and submit to professor for approval by Monday, July 10th. For the analysis, each group must complete the following: Profile the company (brief intro about the firm, its operations, business plan, etc.) Discuss the industry competitors, outlook, history, etc. Historical 5-year trend of actuals for balance sheet and income statement Forecast for the outer 3 years based on some assumptions Analyze how the ratios change through their trend of actuals / forecast Do the same analysis for (3) three of their peer companies within the industry Show how the ratios compare to their peers (industry) Present their review (Power Point or Latex presentation) and key findings to class (15 minutes) (Monday/Tuesday, August 7 th & 8 th ): business or business casual (at a minimum) dress required Submit a professional summary of their findings to the professor on Monday, August 7 th
FINN3226 Financial Theory & Practice Page 5 GENERAL COURSE OUTLINE & TOPICS OF DISCUSSION Date Day Topic (Assignment) 07/05 07/06 Wed Thu Intro/ Syllabus/ Assign Groups / Chpt.1 Overview of Financial Management (Lecture) Chpt. 2 Financial Statements, Cash Flow, & Taxes (Lecture) / Intro to Excel for Finance 07/07 Fri Chpt 2 Financial Statements (Finish lecture) / Go over homework 07/10 Mon Chpt 3 Analysis of Financial Statements (Lecture) 07/11 Tue Chpt 3 Analysis of Financial Statements (Finish lecture) / Go over homework 07/12 Wed Chpt 12 Corporate Valuation and Financial Planning (Lecture) 07/13 Thu Chpt 12 Corporate Valuation and Financial Planning (Lecture)/ Homework 07/14 Fri Chpt 7 Free Cash Flow Valuation Model (Lecture) / Review for Exam #1 07/17 Mon Exam #1 (Chapters 1, 2, 3, and 12) 07/18 Tue Chpt 9 Cost of Capital (Lecture) 07/19 Wed Chpt 9 Cost of Capital (Lecture) / Homework problems 07/20 Thu Chpt 10 Capital Budgeting (Lecture) 07/21 Fri Chpt 10 Capital Budgeting (Lecture) / Homework problems 07/24 Mon Chpt 11 Cash Flow Estimation (Lecture) 07/25 Tue Chpt 11 Cash Flow Estimation (Lecture) / Homework problems 07/26 Wed Chpt 15 Capital Structure (Lecture) 07/27 Thu Chpt 15 Capital Structure (Lecture) / Homework problems 07/28 Fri Chpt 14 Distributions to Shareholders (Lecture) / Review for Exam #2 07/31 Mon Exam #2 (Chapters 9, 10, and 11) 08/01 Tue Chpt 14 Distributions to Shareholders (Lecture) / Homework problems 08/02 Wed Chpt 13 Agency Theory (Lecture) 08/03 Thu Chpt 13 Agency Theory (Lecture) 08/04 Fri Catchup & Review for the Final Exam 08/07 Mon Group Presentations (15-20 min per grp) / Project Summary Due (write-up) 08/08 Tue Group Presentations (15-20 min per grp) 08/09 Wed Final Exam (8:00 to 10:30 am)