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JOHN CABOT UNIVERSITY

COURSE CODE: "FIN 301-3"
COURSE NAME: "Finance"
SEMESTER & YEAR: Spring 2024
SYLLABUS

INSTRUCTOR: Crina Pungulescu
EMAIL: [email protected]
 HOURS: TTH 1:30 PM 2:45 PM
TOTAL NO. OF CONTACT HOURS: 45
CREDITS: 3
PREREQUISITES: Prerequisites: FIN 201, FIN 202, EC 202, MA 208
OFFICE HOURS:
COURSE DESCRIPTION:
This course examines both the theoretical and applied foundations required to make decisions in financial management. The main areas covered include an  overview of the financial system and the efficiency of capital markets, evaluation of financial performance, time value of money, analysis of risk and return, basic portfolio theory, valuation of stocks and bonds, capital budgeting, international financial management, capital structure management, and the CFA Institute Code of Ethics and Standards of Professional Conduct.
SUMMARY OF COURSE CONTENT:

 This  syllabus is a draft. The final syllabus will be made available the first day of class.

 

The topics covered are:


1. The Corporation and Financial Markets

- the four types of firms

- ownership versus control of corporations

- the stock market

          

2. Financial Decision Making and the Law of One Price

- interest rates and the time value of money

- present value and the NPV decision rule

- arbitrage and the law of one price

- no-arbitrage and security prices


3. The Time Value of Money

- the timeline

- the three rules of time travel

- valuing a stream of cash flows

- calculating the net present value

- perpetuities and annuities

- the internal rate of return

 

4. Interest Rates

- interest rate quotes and adjustments

- the determinants of interest rates

- risk and taxes

- the opportunity cost of capital

 

5. Valuing Bonds

- bond cash flows, prices, and yields

- dynamic behavior of bond prices

- the yield curve and bond arbitrage

- corporate bonds

- sovereign bonds

 

6. Investment Decision Rules

- NPV and stand-alone projects

- the internal rate of return rule

- the payback rule

- choosing between projects

 

7. Fundamentals of Capital Budgeting

- forecasting earnings

- determining free cash flow and NPV

- choosing among alternatives

- further adjustments to free cash flow

- analyzing the project

 

8. Valuing Stocks

- the dividend-discount model

- total payout and free cash flow valuation models

- valuation based on comparable firms

- information, competition, and stock prices

 

9. Capital Markets and the Pricing of Risk

- risk and return

- common versus independent risk

- diversification in stock portfolios

- measuring systematic risk

- beta and the cost of capital

 

10. Optimal Portfolio Choice and the Capital Asset Pricing Model

- the expected return of a portfolio

- the volatility of a two-stock portfolio

- the volatility of a large portfolio

- risk versus return: choosing an efficient portfolio

- risk-free saving and borrowing

- the efficient portfolio and required returns

- the Capital Asset Pricing Model

- determining the risk premium
LEARNING OUTCOMES:

Upon successful completion of the course a student will be able to:

·      Understand the Law of One Price and net present value as the basis of financial decision making

·      Understand the mechanics of discounting

·      Understand the key determinants of interest rates and their relation to the cost of capital

·      Analyze bond prices and yields, as well as the risk of fixed-income securities

·      Value projects within the firm as well as the firm as a whole

·      Understand risk and return, the distinction between diversifiable and systematic risk

·      Understand the mean-variance optimization and the Capital Asset Pricing Model
TEXTBOOK:
Book TitleAuthorPublisherISBN numberLibrary Call NumberCommentsFormatLocal BookstoreOnline Purchase
Corporate FinanceJonathan Berk, Peter DeMarzoPearson978-1292-30415-1 Other editions of the textbook are also acceptable.   
REQUIRED RESERVED READING:
NONE

RECOMMENDED RESERVED READING:
NONE
GRADING POLICY
-ASSESSMENT METHODS:
AssignmentGuidelinesWeight
Homework 20
Exam 1 20
Exam 2 20
Final ExamSince the final exam is comprehensive, if the final exam grade is higher than any or both partial exam grade(s), the final exam grade will replace the (lower) partial exam grade(s) in the calculation of the final grade for the course.40

-ASSESSMENT CRITERIA:
AWork of this quality directly addresses the question or problem raised and provides a coherent argument displaying an extensive knowledge of relevant information or content. The student demonstrates complete, accurate, and critical knowledge of all the topics, and is able to solve problems autonomously.
BThis is highly competent level of performance and directly addresses the question or problem raised. There is a demonstration of some ability to critically evaluate theory and concepts and relate them to practice. The work does not suffer from any major errors or omissions and provides evidence that the student uses clear logic in his/her arguments.
CThis is an acceptable level of performance and provides answers that are clear but limited, reflecting the information offered in the lectures. Mathematical statements are properly written most of the time.
DThis level of performances demonstrates that the student lacks a coherent grasp of the material. Important information is omitted and irrelevant points included. Many mistakes are made in solving the problem raised. In effect, the student has barely done enough to persuade the instructor that s/he should not fail.
FThis work fails to show any knowledge or understanding of the subject-matter. Most of the material in the answer is irrelevant.
-ATTENDANCE REQUIREMENTS:

Students are required to attend classes following the University’s policies.
ACADEMIC HONESTY
As stated in the university catalog, any student who commits an act of academic dishonesty will receive a failing grade on the work in which the dishonesty occurred. In addition, acts of academic dishonesty, irrespective of the weight of the assignment, may result in the student receiving a failing grade in the course. Instances of academic dishonesty will be reported to the Dean of Academic Affairs. A student who is reported twice for academic dishonesty is subject to summary dismissal from the University. In such a case, the Academic Council will then make a recommendation to the President, who will make the final decision.
STUDENTS WITH LEARNING OR OTHER DISABILITIES
John Cabot University does not discriminate on the basis of disability or handicap. Students with approved accommodations must inform their professors at the beginning of the term. Please see the website for the complete policy.
SCHEDULE
SessionSession FocusReading AssignmentOther AssignmentMeeting Place/Exam Dates
Week 1 to 4Topics 1 to 3   
Week 4 to 7Topics 4 to 5   
Week 7 to 10Topics 6 to 8  Exam 1: Date to be announced on the first day of class
Week 10 to 13Topics 9 and 10  Exam 2: Date to be announced on the fist day of class. Final Exam (Comprehensive): see University schedule for date and time