BUS 106 (ECON 134) Introduction to Financial Management

BUS 106 (ECON 134)

Introduction to Financial Management

Winter 2024

SoBA Mission Statement

Our mission is to develop diverse leaders, propel research-based innovation and promote the sustainable growth of Inland Southern California within the global economy. We harness the powerful resources of UC and our location at the nexus of commerce to create a laboratory for education, research, and productive partnerships across economic enterprises.

The strategic activities that propel our mission include:

·  Conducting basic and applied research in management that explores and informs the creation, development and management of growth;

·  Providing degree programs that prepare our students to be effective managers and responsible community leaders with a deep understanding of the dynamics of growth

in both a regional and global context;

·      Partnering with business and community leaders through a shared commitment to exemplary growth; and

·      Delivering educational programs to executives and the public at large that respond to the needs of our local, state, national, and international communities.

Course description

This course provides a foundation in theories of finance. Topics include time value of money, net present value analysis, security valuation, portfolio theory, asset pricing models, capital budgeting decision, capital structure decision, sources of financing for a firm, (dividend policy,) and mergers and acquisitions.

Course/Learning objective

This course is designed to give business students an overview of the role of financial management in business firms and to facilitate understanding of financial concepts and their applications. It is also intended to develop some proficiency in the use of the basic tools and techniques employed in financial analysis, traditional as well as newer concepts. It is, therefore, to help students understand why corporate financial managers behave the way they do. Students must also absorb facts and institutional materials being covered in lectures as well as in the text.

Prerequisite

(BUS 020, STAT 048, and ECON 102) or (BUS 020, ECON 101, and ECON104A)

Course Materials

· Textbook: Richard Brealey et al, Fundamentals of Corporate Finance,

11^th ed., McGraw-Hill Irwin

Grading policy

A. Midterm I 25%

B. Midterm II 25%

C. Final Exam 25%

D. Homework 17%

E. Class Participation 8%

Grades will be posted on Canvas.  If you find any problem with your score, you must inform the instructor within one week from the time this score is posted. After one week, scores will not be reviewed.

A, B, C.  Midterm I, Midterm II, and Final Exam

In the case of score dispute, the entire exam will be reviewed, not just the question(s) in dispute. The score could go up, down, or remain the same.

Exams are basically noncumulative in terms of topics covered, but obviously, you are assumed to know the main concepts and techniques covered in the previous exam.

Students who are absent from any exam without prior permission will receive a score of zero for that particular exam.  Requests for permission to be absent from an exam will be considered only in cases of serious illness, and a formal note and a phone call from the physician must be accompanied. No exception to this rule under any circumstances!

D. Homework

Students are expected to solve suggested Self-Test problems and Questions and Problems at the end of each assigned chapter in the textbook, and required to submit their answers for selected questions/problems (QP) written BOLD in Italic below. This homework (Homework A) is to be submitted but solving other suggested questions/problems as well by yourself is crucial to understand the subject matter and to monitor your progress in the course.  Some exam questions will resemble homework problems. Web Exercise (Homework B) is also required. Note that I do NOT accept homework by email or fax or late homework. All homework must be submitted to the TA’s Canvas site.  Also, the pace and structure of the lectures and discussions will presume that students have completed the weekly reading assignment prior to the first class meeting in that week.

Homework A (QP in BOLD required): (0.5% max point each for best 23 out of 28 submitted QPs)

Some of these problems will be reviewed in class and/or in TA discussion sessions occasionally, and a packet that has key answers for QP will be available on UCR’s Canvas site. ST = Self-Test; QP = Questions and Problems.

Chap 1 -  ST 1,2,6

Chap 5 -  ST 1,2,3,4,5,7,8,10,11,12

Chap 8 -  ST 1,2,3,4,5,6 QP 14,15, 13, 16, 19

Chap 11 - ST 2,3,4,5,6,7 QP 6,13,18,24, 16, 17, 19

Chap 12 - ST 1,2,4,5,6,7 QP 10,11,15,17,20,22,23,31,33, 13, 27, 28, 29, 30, 32

Chap 6 -  ST 2,4,5 QP 4,9,30,7, 10, 33

Chap 7 -  ST 1,2,3,4,5,7,8 QP 9,10,16,18,49,51, 29, 31, 33 (a,b,c), 43, 48

Chap 13 - ST 1,2,4,6,7 QP 3,4,10,18, 2, 14, 20

Chap 16 - ST 1,5,6,8 QP 21,24,25, 20, 30

Chap 21 - ST 1,2,3,4 QP 6,7,12, 9, 10, 11

Homework B (All required): (2.75% max point for each submitted WE)

WE = Web Exercise

Chap 12 - WE 1 (Due at the beginning of Midterm II)

Chap 21 - WE 1 (Due at the beginning of Final Exam)

E. Class Participation

The class participation score will be determined jointly by the instructor and the TA.  Primary considerations include class and TA session attendance, participation in class and TA session discussions, and other requirements explained by the TA.

Note that students are expected to attend the Zoom class sessions during the scheduled lecture time (MW 11:00 am - 12:20 pm), but can also watch the recorded sessions later on Canvas. For the class and TA sessions, however, TA and I will track students’ virtual attendance records.

There are 19 Zoom class sessions altogether for Winter 2024.  You will be excused for up to 4 absences without penalty. Any absence beyond the 4 will adversely affect your class participation score.  Also, there are 10 TA discussion sessions.  You will be excused for up to 2 absences without penalty. Any absence beyond the 2 will adversely affect your class participation score.  Your TA will explain exactly what the penalty would be.

The Zoom class session will be split into two parts.  The first is my lecture for 11:00 am - 12:10 pm, and the second part is the wrap-up and Q&A session for 12:10 - 12:20 pm.

Financial Calculator

Students are strongly encouraged to purchase a financial calculator not just for this course but for their frequent uses of it for the years and careers to come.

It will be handy for homework and exams.  If you have a statistical calculator and know how to use it for time value of money situations, it will be fine.  You can also use MS Excel or the app you can find on the internet (but not for the exams). The manual should teach you how to use yours and of course you can learn it from YouTube. For your convenience, a manual folder will be available on the course Canvas site.  Please note that we won’t ‘teach’ you individually how to use your own.

Class Notes and Handouts

Class notes (student version of PowerPoint slides) will be available at least one day before the class meetings. Note that another packet that has all class handouts for this class will be available on UCR’s Canvas site.

Note also that students need to frequently check the course website on Canvas for important announcements and all course materials. Canvas is the primary channel of the communication.

Course Schedule

Note: (1) The above schedule is tentative; can be changed depending on our speed.

(2) I will most likely need to cancel a class session or two (in mid or late February) to fly out to attend an important family event, and will prepare a pre-recorded session(s) on Canvas if that happens.

Integrity statement:

At the University of California, Riverside (UCR) honesty and integrity are fundamental values that guide and inform us as individuals and as a community. The academic culture requires that each student take responsibility for learning and for producing work that reflect their intellectual potential, curiosity, and capability. Students must represent themselves truthfully, claim only work that is their own, acknowledge their use of others’ words, research results, and ideas, using the methods accepted by the appropriate academic disciplines and engage honestly in all academic assignments. Misunderstanding of the appropriate academic conduct will not be accepted as an excuse for academic misconduct. If a student is in doubt about appropriate academic conduct in a particular situation, he or she should consult with the instructor in the course to avoid the serious charge of academic misconduct.

To ensure the highest standard of academic integrity, all students should be familiar with the guidelines posted at:

http://conduct.ucr.edu/SiteCollectionDocuments/DocumentsFromStudentConduct/AcademicIntegrityBrochureStudent.pdf

If I find any academic plagiarism or dishonesty in a submitted homework, the students (both the one who copied AND the one who was copied) will get minus 200% of the maximum points for the particular homework for the first violation.  For example, the students would get -5.5 points for a cheated WE (Web Exercise) whose maximum is 2.75 point.  The penalty becomes minus 400% for the second and more violations.  There will be no maximum for cumulative penalties for violations.  If it happens for an exam, the student will get an automatic F for the course, and I will report the matter to the SCAIP (Student Conduct & Academic Integrity Programs) office (http://conduct.ucr.edu/index.html).