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Approved by University Studies Sub-Committee.
Department
or Program:
Finance Course
Number:
360 Semester
Hours:
3 Frequency
of Offering:
Every Semester Course
Title:
Corporate Finance Catalog
Description:
The theory and practice of corporate finance, using the approaches and quantitative
methods required of today’s financial managers and decision-makers. Special emphasis on a theory of value, the
determinants of risk, return and the opportunity cost of capital, applied to both real and
financial assets, the study of leverage issues, the exploitation of market inefficiencies,
and the development of various tools and economic reasoning which provide the basis for a
wide range of corporate financial decisions. This is an existing course previously approved by A2C2:
Yes This
is a new course proposal:
No Department
Contact Person:
Gabriel Manrique, gmanrique@winona.edu University
Studies Approval is requested in:
Unity and Diversity: Critical Analysis Attachments: The attached sample syllabus explains
what is typically covered in this course. Several
sections of this course are taught every semester. While
there may be differences in the way faculty members deliver the course, the coverage of
the course is similar across sections. The
sample syllabus points out in which parts of the course the four outcomes for Critical
Analysis (A through D) are covered. This
syllabus is included in this application for purposes of illustration. Each faculty member is still responsible for
his/her own course syllabus. As
required by the approval process, the following address the four outcomes listed for
Critical Analysis courses and documents course content and learning activities relevant to
the course outcomes: a. Evaluate
the validity and reliability of information. Students
learn to seek, use, and evaluate corporate data in this course. The early part of the course necessarily covers
the use of accounting and financial data. Students
learn which types of data are most useful for their analysis. Eventually, as students learn the financial models
especially those that deal with questions of asset valuation, students learn to check for
consistency and reliability of the information that is reported by different companies and
agencies. Thus, the models in finance learned
in this course, become the basis for analyzing the usefulness of information. The course utilizes data and data bases provided
by corporations and are the same type of data used in the business world. b. Analyze
modes of thought, expressive works, arguments, explanations or theories. A
number of theories from both economics and finance are at the core of this course,
particularly those that deal with risk and return. These
include, but are not limited to, topics such as opportunity cost, the time value of money,
market clearing models, efficiency, and maximization.
Students are made to understand and analyze these theories since they lead
to the formulation of the Capital Asset Pricing Model (CAPM) – the model that lies at
the heart of modern day financial analysis. Students
are constantly exposed to these models and variations throughout the course. The majority of these models tend to be highly
quantitative. c. Recognize
possible inadequacies or biases in the evidence given to support arguments or conclusions. Part
of the task of analysis in finance is to be able to sift through the information in order
to arrive at conclusions that will help to maximize shareholder wealth. Students in this course are therefore asked to
examine information and assumptions closely to reduce the chance of errors in conclusions
and judgments. This is done throughout the
course in the exercises and the case studies. In
addition, students are exposed to critiques of the models themselves – including the
CAPM – in order that they may have a better understanding of its uses and
limitations. Such analysis is included in the
build up to the models that are later used in the formal approaches to valuation, capital
allocation, and financing decisions. d. Advance
and support claims. Students
in this course must learn about making decisions with respect to asset valuation, capital
budgeting, working capital, dividend policy, and capital structure. Using data analysis and the models of corporate
finance, students must learn to answer questions that include whether: an asset is
correctly priced, a company’s capital structure is efficiently financed and
allocated, a company’s working capital is effectively managed, and risks are
adequately compensated. In order to make
proper conclusions or to support their claims, students must have the proper data, utilize
the appropriate models, and analyze their conclusions. Numerous exercises and case studies
during the course provide students the opportunity to do so.
SAMPLE
SYLLABUS SYLLABUS FOR FIN 360 CORPORATE FINANCE-FALL
2002 Professor:
Chan-Wung Kim Office:
Somsen 310 Class Times:
Tuesday 6:00-8:50pm Office Hours:
5:00pm-6:00pm Tuesday or by appointment Telephone:
507-457-2388 e-mail:
ckim@winona.edu TEXT: S.
Ross, R. Westerfield, and B. Jordan, Fundamentals of Corporate Finance, McGraw-Hill, 6th
edition, 2003, and Spreadsheet Modeling in Corporate Finance by C. Holden, Prentice Hall,
2002. COURSE
OBJECTIVES:
Corporate finance is intended to provide you with a sound understanding and
appreciation of the principles of corporate finance.
The course describes both the theory and practice of financial decision making by
corporations, and shows how financial theory can be used to address practical problems and
illuminate institutional aspects of the financial world.
The course will emphasize the valuation of financial assets in a risk-return
framework, and will help you understand how capital markets operate. Specific topics to be covered include the concept
of NPV and its application to capital budgeting, investments, portfolio theory and the
CAPM, dividend policy, debt policy (optimal capital structure), the valuation of financial
securities (common stock and debt), and short-term financing. In the process you should develop ability and
methodological skills that will enable you to address a variety of complex real-world
financial problems. UNIVERSITY STUDIES:
CRITICAL ANALYSIS This course fulfills the three
semester hours of Critical Analysis required under the Unity and Diversity component of
the University Studies Program. As such it
seeks to include requirements and learning activities that promote students’
abilities to: a. evaluate the validity and
reliability of information; b. analyze modes of thought,
expressive works, arguments, explanations, or theories; c. recognize possible inadequacies
or biases in the evidence given to support arguments or conclusions; and d. advance and support claims. The “Tentative Course Outline and Class Schedule” below identifies these outcomes in parenthesis. MODE OF INSTRUCTION
AND PREPARATION:
The course will use a mixture of lectures and text reading assignments,
supplemented with case analysis to better appreciate the application of theoretical
concepts and tools to various real-world financial situations. Selected problems will be assigned for homework
and evaluated regularly as a progress feedback.
Each day you will be assumed to have done the required reading and you should come
to class prepared to discuss the material with others so that the concepts are understood
and reinforced. You should also use class as
an opportunity to ask questions about what you have read and share with others your
understanding and/or queries about the material. REQUIREMENTS: CASE: Students will be assigned one case. This case will enable you to analyze real world
financial problems faced by corporate managers. You
will be expected to work in groups. Group
formation and division of labor within the group is entirely your responsibility. Each member of any group will receive the same
grade as that assigned to the group as a whole for the cases. Groups should not consist of more than four
members each. There should be no
collaboration between groups. EXAMS: There will be one mid-term exam and one final
exam. The exams will consist of a series of
multiple choice questions and some full response questions.
The schedule for the exams is as follows:
Mid-term Exam : Tuesday, October 15
Final Exam: TBA There are no
provisions for make up exams. It is
imperative that your schedule permits you to take the exams at the above mentioned date
and time. COURSE EVALUATION:
Your performance in the course will be evaluated based on written exams, selected
homework problems, attendance, quizzes and your written case analyses. The relative weights of each are:
Midterm Exams
35%
Final Exam
40%
Case Analysis
10%
Attendance, Participation and quizzes
15% Important: Please note that there will be no incompletes
given out. TENTATIVE COURSE OUTLINE AND CLASS SCHEDULE Week 1: Sep. 3
Class discussion:
Ch. 1 Introduction/Overview
(A, B)
Ch. 2 Accounting
Statements and Cash Flow (A)
Week 2: Sep. 10 Class discussion:
Ch. 5 How to Calculate
Present Values (A,C)
Assigned questions: 1-20
We will discuss one of the central notions in finance, namely, the time value of
money. We should develop a working
familiarity with some of the algebra, which will be heavily used throughout the rest of
class. Week 3: Sep. 17 Quiz on the time
value of money Class discussion:
Ch. 6 Discounted cash flow valuation (A,C)
Assigned questions: 1-75 Week 4: Sep. 24 Class discussion:
Ch. 7 Interest rate and
Bond Valuation (C,D)
Assigned questions: 1-29
We will discuss
basic principles underlying the valuation of financial assets such as bonds and stocks. Here you can easily apply the concept of the time
value of money to the security valuation. Week 5: Oct. 1 Quiz on bond
valuation Class discussion:
Ch. 8 Stock valuation (C, D)
Assigned questions: 1-22 Week 6: Oct. 8 Quiz on stock
valuation Class discussion:
Ch. 12 Capital Market Theory: An Overview (A,
B, C)
Assigned questions: 1-18 Week 7: Oct. 15 Mid term exam Week 8: Oct. 22 Class discussion:
Ch 13 Risk and return (B, C)
Assigned questions: 1-27
Unlike earlier chapters, we introduce uncertainty.
We will briefly discuss the portfolio theory and examine the relationship between
expected returns and risk. In market
efficiency, we will discuss the notion of capital market efficiency, which has held a
central position in finance. We will also
discuss the implications of different forms of efficiency and review some of the empirical
evidence. Week 9: Oct. 29
Quiz on risk and
return Class discussion:
Ch. 9 Capital Budgeting: NPV
vs. Other Criteria (B, C, D)
Assigned questions: 1-23
We will first examine the various techniques used in capital budgeting, such as
payback, IRR and NPV, and look at the pros and cons of each. We will then examine the
concept of cash flows for capital budgeting and its intricacies. Week 10: Nov. 5 Case Assigned: Super
project Class discussion:
Ch. 10 NPV and Capital
Budgeting (C, D)
Assigned questions:
1-15 Week 11: Nov. 12 Class discussion:
Ch. 17 Capital Structure (C, D)
Assigned questions: 1-27
The class so far has implicitly assumed that the firm is all-equity financed. In practice, firms employ many different financing
methods. It will raise questions about the
impact of capital structure on the value of a firm. We
will begin a discussion of the Modigliani-Miller propositions. Week 12: Nov. 19
Case Discussion Class discussion:
Ch. 15 Cost of capital (C, D)
Assigned questions: 1-23 Week 13: Nov. 26 Class discussion: Ch.
18 Dividend Policy (C, D)
Assigned questions: 1-18
We will discuss the effect of dividend policy on firm value. Week 14: Dec. 3 Class discussion:
Ch. 19 Short-term financial planning (C, D)
Assigned questions: 1-17
Ch. 20 & 21 Working capital management (C,
D)
Assigned questions: 1-10 (Ch. 20) & 1-5 (Ch. 21)
Week 15: Dec. 10 Class discussion:
Review Week 16: Dec
16-19
Final Exam
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