Finance 325

Intermediate Finance

Spring 2012

Professor: Dr. Song Office: SS 3357

Office Hour: 9:00am – 10:00am (Mon/Wed) or by appointment Phone: 594-5334

E-mail: moon.song@sdsu.edu

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I. BSBA Goals

BSBA students will graduate being Effective Communicators, Critical Thinkers, Able to Analyze Ethical Problems, Global in their perspective, and Knowledgeable about the essentials of business. This class contributes to those goals through its student learning outcomes.

II. Course Description

Finance 325 is designed to strengthen and extend your knowledge of financial theory and practice. Topics covered include the theory of value, risk and return, capital investment decisions, and financing decisions. We also discuss the mechanics and regulatory environment of corporate takeovers, leveraged buyouts, and various form of managerial compensation. This course draws from and integrates material in your previous finance, economics, accounting, and quantitative methods course. Especially, you should be familiar with the basic statistics and elementary calculus.

III. Student Learning Outcomes

Create and interpret financial statements.

Determine discount/hurdle rates.

Evaluate investments in working capital and long-term assets.

Demonstrate proficiency in valuation techniques, both DCF (discounted cash flow) and non-DCF

Determine optimal capital structure and dividend policy

Apply the contingent claims approach to valuation

IV. Course Prerequisites

Prerequisites for Finance 325 include a minimum grade of C in Finance 323 and other requirements in the General Catalog.

V. Course Materials

Text: Brealey Myers Allen, Principles of Corporate Finance, McGraw-Hill/Irwin, Tenth edition.

VI. Grades, Assignment, and Exams

Final grades will be based on assignments, homework (10%), midterm exam I, II (25%, 25%), final exam (40%).

*. All of the assignments will require the use of a spreadsheet package.
*. Late assignment will be depreciated.
*. Exams are closed book and will consist of numerical problems.
*. No make-up exam is allowed.
*. All exam and graded assignments will be kept by the professor.

COURSE OUTLINE

CLASS TOPIC

1 Ch 1 Goals and Governance of the Firm  

2 Ch 2 How to Calculate Present Values  

3/4 Ch 3 The Value of Bonds

4/5 Ch 4 The Value of Common Stocks

6 Ch 5 Advanced Issues of Capital Budgeting                                                                 

6/7 Ch 6 Making Investment Decisions with NPV Rule                     

8 Review

9 Midterm Exam I (February 15, Wednesday)

10/11 Ch 7/8   Risk, Return, and Opportunity Cost of Capital (CAPM)              

12/13 Ch 9 Risk and Cost of the Capital

14 Ch 12 Economic Value Added (EVA)                    

15 Ch 13 Efficient Market and Behavioral Finance

16 Ch 16 Payout Policy                                                                    

17 Ch 17 Does Debt Policy Matter?                                         

18 Review

19 Midterm II (March 21, Wednesday)

20/21 Ch 18 How Much Should a Firm Borrow?     

22/23 Ch 19 Financing and Valuation 

24 Ch 20 Understanding Options                                                   

25/26 Ch 21 Valuing Options

27 Ch 22 Real Options

28 Ch 23 Credit Risk and the Value of Corporate Debt

29 Ch 25 Leasing                                                                     

30 Ch 31 Mergers