Dr. P.V. Viswanath

 

pviswanath@pace.edu

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  Courses / FIN 647 /  
 
 
 
 
 

FIN 647: ADVANCED TOPICS IN FINANCIAL MANAGEMENT Fall 2003

22190: Tuesdays, 5:35 p.m. to 8:15 p.m. at the New York campus, Rm W512
Email: pviswanath@pace.edu Tel: (212) 346-1817
Webpage: http://www.pviswanath.com
Blackboard: http://blackboard.pace.edu

Office W486, Pace New York
Office hours: Mondays and Tuesdays: 3:00 p.m. to 5:30 p.m. and by appointment
Note:  I am in my office most of the week; send me e-mail, give me a call or just drop by!
   

Course Objectives

The primary objective of this course is to provide the student with the theoretical background and analytical tools necessary for sound financial decision-making. Other objectives include: 1) preparing students for more advanced work in finance and investments; 2) an appreciation of financial and economic reasoning to provide the capability to read and understand advanced finance materials; 3) the ability to apply the lessons of finance in a practical context.

Since this is an advanced course in Finance, you will be expected to do a lot of reading on your own.  Class meetings will be an opportunity to discuss the issues raised in the relevant textbook chapters, and to engage in exercises designed to improve understanding of finance concepts.  Here are two examples of how this will be done.  One, I will assign very recent Wall Street Journal articles, which you will read and comment on.  Two, you will use the G-PACT (Global Portfolio Analysis Center; W404) and other resources to research and report on a selected company; you will analyze and apply the various principles you will learn in the course, to this company.

When you have completed this course successfully, you will be familiar with:

  • The meanings of fundamental financial concepts.
  • Asset valuation: how to value assets, defined broadly, e.g. firms, projects, stocks, and bonds.
  • Risk-return models: how to price risk, i.e. how to adjust the value of an asset to take into account the riskiness of the asset.
  • Optimal Capital Structure: how to and how not to finance a firm or project.
  • Dividend Policy: how to decide how much to pay out in dividends and when to pay them out.

When you have completed the course successfully, you should be able to do the following (time permitting):

  • Use cash flow information to evaluate a project.
  • Use historical data to estimate the riskiness of a stock.
  • Distinguish between uncertainty that is relevant for an investor and uncertainty that is irrelevant.
  • Use financial statement information and market information to price a firm and its stock.
  • Use financial statement information to decide on how much debt a firm should have.
  • Use financial statement information to decide how much a firm should pay out in dividends.

Course Text

The course text is very good for anybody wishing to learn the practice of corporate finance; this is why I have chosen the book.  To a great extent, I expect that we will use the book as a manual, using it in applications whenever we need it. I look upon this course as an opportunity to teach and to learn. The way I see it, there are three players in this course: the teacher, the students and the textbook.  I hope we will all be ready to capitalize on the different interactions possible between these three players. 

The first step, however, is to read all the assigned chapters of the book thoroughly, if critically. You should read each text-book chapter before we begin it, while we are working through it, and also after we complete it; as discussed above, class sessions are meant to complement the text, rather than substitute for it. Also make sure to read the powerpoint slides for each chapter; links to these can be found from the Class Schedule.

Computer Use and E-mail Policy:

You should obtain a Pace e-mail address as soon as possible, so that I can send you e-mail. Any student's Pace e-mail address can be obtained by going to http://appserv.pace.edu/WhitePages/Students.cfm or by going to the main Pace Home Page and clicking on White Pages from the IntraPace section towards the bottom of the page (the default password is the studentís Pace Identification Number).  More information about e-mail address, etc. can be obtained from the DoIT website and clicking on Computer from the left-hand side menu panel.  Even if you have another e-mail address where you wish to get your e-mail, you should still get a Pace e-mail address.  Once you have your Pace e-mail account and password, you can go to the Pace University Student E-Mail Server at http://stmail.pace.edu and have your e-mail forwarded to your preferred e-mail address.  You can find information on how to have your mail automatically forwarded at the DoIT websiteThe only way that I can communicate with you is through your Pace e-mail account.  So please get your Pace account information as soon as possible.

Check your e-mail and the FIN 647 website on a regular basis.  This will enable you to get the maximum from the course. I am available for consultation by e-mail at pviswanath@pace.edu. I check my e-mail practically every day, and, in most cases, you should get a speedy response to any questions.  

We will also be using Blackboard as a gateway for some aspects of the course.  Please log in to Blackboard at the earliest opportunity.    Blackboard login procedures can be found on the appropriate Blackboard site.  Essentially, your login ID for Blackboard will be your email ID, and your password will be your 9-digit social security number (for more details, go to the Blackboard site).  

Course Requirements

Class Attendance and Participation

Class attendance is mandatory and is highly recommended.  This is for two reasons: one, I believe that you will understand the material much better if you attend the class sessions; two, modifications to the class schedule will be announced in class and/or on the BlackBoard website.  Also, on occasion, I conduct classroom exercises, give short quizzes, or assign additional work. If you miss a class session during which we have such a classroom exercise, or additional work is assigned, your grade will be adversely affected for this reason as well.  (Of course, it goes without saying that missing quizzes will affect your grade adversely.)  In any case, you should consult fellow students on what was done during the class time that you missed, and collect handouts for that day's session. You should also bring a calculator to all class meetings.

I also require that you read the Wall Street Journal and/or the business section of the New York Times on a regular basis. Some exam questions will be based on current newspaper and magazine articles that are related to course material. Hence you should cultivate and improve your ability to read newspaper articles critically.  If you do not already subscribe to the Wall Street Journal, you can do so online from the FIN 647 website.

There are two other reasons why you should try to attend as regularly as possible. One, classroom participation will help your grade. By participation, I mean answering questions and making intelligent comments. Two, we will sometime do learning exercises in class; doing them can help you substantially in understanding the material.  I often also give credit for participation in these classroom exercises.

Assignments and Working with Teams

Assignments are a critical part of the course.  The main purpose of these assignments is to make sure that you understand the material, and to prepare you for the exams.  There will be four assignments; details can be found on the FIN 647 website.  You may only submit assignments as part of a team, unless advised otherwise by me; hence you should form your teams immediately.  Each team may consist of three to five members. I expect you to form your own teams. (However, if need be, I will assign students to teams, depending upon the need, as I perceive it.)  By the beginning of the second week of classes, each team should give me a filled-out copy of the Team Contract.  The team contract should be filled out in full, and should be signed by all team members.  

Although assignments will be turned in by the team as a unit, I expect all members of a team to participate equitably in the work involved.  I also expect each member of the team to work on each project; this is also in your own interests because the assignments are useful preparation for the exams. Every project submitted must also include a listing of which parts of the assignment were worked on by which team members.  Whether or not a given team member worked on a specific part of the assignment, s/he must be familiar with the entire assignment that is turned in.  I also expect each team member to have a copy of the final version of the submitted assignment; if any team member does not have a copy of the final assignment and/or s/he is not familiar with any part of the submitted assignment, I will reduce that team member's grade for that assignment.  You may also use teams for joint learning and study -- that is up to the members of each team. Teams may also want to assign members on a rotating basis to keep track of whatever is posted on the Web. However, each student is separately responsible for the material that is put up on the Web. Failure of the designated team member to fulfill his/her duties will not absolve any team member of the responsibility to keep up-to-date vis-a-vis class activities on the Web, or off.

All assignments should be turned in, typed, as far as possible (i.e. mathematical formulas, etc. may be written in by hand, if necessary).

Academic Integrity

Any student taking this course is presumed to agree to abide by the school policy on academic integrity, as described on page L-49 of the Graduate Catalog 2001-2003. Please obtain a copy of the catalog and familiarize yourself with the policy.

Disability Policy

School policy regarding disabilities is described on page L-53 of the Graduate Catalog. You can contact the coordinator at 212-346-1526 in New York and 914-773-3710 in Westchester. Information can also be found on the University webpage.

Exams

There will be a midterm exam and a final. Exams are closed book, but I will allow you to bring in one 8.5" x 11" sheet of paper containing whatever material you wish (two sides). For example, you may want to write out formulas on these sheets. More details on the nature of the exams can be found on the FAQ page.  If you miss an exam without being excused, I cannot give you any credit for that exam.  University policy allows make-ups only for serious personal illness or death in the family, for which documentation may be required.  You can look at past exams and solutions on my website; however, the actual format of the exams this term will differ substantially from those of previous terms. Please bring your own calculators to the exams; PDAs, however, are not allowed.  Get in touch with me regarding any question you may have regarding the exams, or the course in general.

Short Quizzes

There will be four short quizzes.  There will be two kinds of questions on these quizzes - one, definitions and two, short questions.  Some examples of these can be found at the on Practice Problems page on my website -- click on the appropriate topic, and you will find the definitions and short question examples at the top of the page.  These quizzes will be closed-book.  Please treat these quizzes seriously because they will be good preparation for the midterm and the final, as part of those exams will resemble the questions on the quizzes.

Study Aids

Practice Problems

In addition to the course requirements discussed above, you may want to try your hand at the problems at the end of each chapter. Some of these problems will be discussed in class; however, none of these problems are expected to be handed in, although you may come to see me if you need help with any problem.  Solutions to end-of-chapter problems are available on the web.  A password to access the site can be obtained from the course Blackboard site.

I have also prepared a list of practice problems, some of which appeared in exams in previous years.  These have been generated by me, for the most part.  You should also look at the end-of-chapter problems.  I change the format of my exams from time to time, so the exam structure for this term may not resemble that of past exams.  More information will be provided in class.

Media Articles

On my webpages, you will find recent media articles.  From time to time, I will add to this list.  There are several reasons why you should look regularly at these pages.  

  • I will be posting interesting and recent articles to this directory.  As such, it will be a useful way for you to keep abreast of topical issues (in addition to your regular perusal of the Wall Street Journal.)
  • I will pose questions on the subject matter of several of the articles.  These questions will be good preparation for the media article based questions on the exams.
  • You can draw on the articles for classroom discussions.
  • These articles and the appended questions are useful preparation for job interviews.

The password, necessary to access the Media Articles section will be announced in class, and can also be found at the Blackboard website. In case of emergency, you can contact me for the password.

Grades

Your final grade will be determined as follows:

Factor  Impact on grade
Midterm 30%
Final 30%
Projects 20%
Short Quizzes 20%
Class Participation At my discretion

Letter grades will be assigned as follows:  

Course Grade Quantitative Class Score
A, A- 90%-100%
B+, B, B- 80%-89.99%
C+, C 70%-79.99%
C-, D+, D 60-69.99%
F 0-59.99%

Note that the minimum and maximum quantitative scores for plus and minus refinements to the letter grades will be at my discretion. These will be partly determined by the distribution of student scores within each letter grade category.   I place a high value on effort; at my discretion, I will raise your grade one notch if I feel that you have tried hard to satisfy all the requirements of the course.

Prerequisites:

Students must have satisfied all prerequisites for this course, viz. BUS 046 and BUS 502/MBA 628 and BUS 508/MBA 626 and BUS 512/MBA 632. I will presume complete familiarity with all topics taught in these courses. I expect all students enrolled in FIN 647 to have the following prerequisites:

  1. Ability to manipulate equations
  2. Knowledge of basic financial mathematics
  3. A solid grounding in Time Value of Money
  4. Familiarity with Excel
  5. English composition: An ability to write a report using basic principles of English grammar and composition

Data Cards

On the index card handed out in class, please fill in the information requested below.  Make sure to number the item that you are responding to.  Leave space on the top right hand side for a photograph.

  1. Name
  2. Home and Work Phone number; Fax number, if any
  3. Email address, other than at pace.edu (for my convenience).  (Note that I will send you email only to your Pace email address)
  4. Functional expertise/interest in business administration (e.g. accounting, finance, personnel administration)
  5. Work experience, if any (provide particulars of what your duties were)
  6. Previous knowledge of finance (if any)
  7. Interests outside of business management (such as languages, music, etc.)
  8. What spreadsheet program do you know? Where did you learn it, and when?
  9. When did you take MBA 632?