Dr. P.V. Viswanath

pviswanath@pace.edu

FIN 647: ADVANCED TOPICS IN FINANCIAL MANAGEMENT Fall 2009

40115: Thursdays, 1:25 to 4:10 p.m. at the Civic Center campus, Room no. 618
Email: pviswanath@pace.edu Tel: (212) 618-6518
Webpage: http://www.pviswanath.com
Blackboard: http://blackboard.pace.edu

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.  For example, I will assign Wall Street Journal articles, which you will read and comment on.  Two, you will use library 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 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

Corporate Finance by Jonathan Berk and Peter DeMarzo, Pearson Addison-Wesley plus MyFinanceLab software. You can buy this in three different ways:

• MyFinanceLab without e-book - $50 (purchase at http://www.myfinancelab.com); if you choose this option, you will need to get the book itself from elsewhere.
• MyFinanceLab with full e-book - $90 (purchase at http://www.myfinancelab.com)
• Student Value Edition plus myfinancelab (ISBN: 0321546296) -- you can buy this at the Pace Bookstore.

Once you buy access to MyFinanceLab in on of the ways indicated above, you need to go to http://www.myfinancelab.com/getstarted/register.shtml to register and access to the learning materials that I have customized for the course. For details on how to access this course on MyFinanceLab, click here.

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 student’s 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 website.  The 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).  

If you need help with Blackboard, please click here. You can also contact Danielle Plass.

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

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 are two kinds of end-of-chapter problem assignments: one that you need not turn in -- these can be found here and are suggested problems to help you understand the material and prepare for exams; and one that must turn in -- these are at MyFinanceLab.com and have deadlines. The deadlines are indicated on the Course TimeTable; if the deadline passes, you will lose points so you are advised to do them on time. For instructions on how to use MyFinanceLab, click here.

There will also be a Blackboard Discussion Group in which you are required to participate. These will be mostly media articles that I will assign, along with questions -- you will be required to comment on the article, using the questions as guidelines. Do not structure your postings as direct answers to the questions. I will grade you on your postings in terms of analytical content, understanding of the issues described in the article, introduction of new material from the textbook, other books, journal articles, or other web-content. Students how post earlier will be rewarded -- so even though your first instinct might be to wait to see what other people post, this may not be an optimal strategy.

The purpose of the Blackboard Discussion group is twofold -- one, to allow you to understand how the subjects discussed in class relate to topical issues; two, to prepare you for the exam.

I may assign additional assignments -- these assignments should be turned in by email unless otherwise instructed.

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-52 of the Graduate Catalog 2006-2007. Please obtain a copy of the catalog and familiarize yourself with the policy.

Disability Policy

School policy regarding disabilities is described on page L-56 of the Graduate Catalog. You can contact the disabilities coordinator at 212-346-1526. Information can also be found on the University webpage.

Exams

There will be a midterm exam and a final. Exams are closed book (unless otherwise announced), but I will allow you to bring in one 8.5" x 11" sheet of paper containing formulas only (two sides). You should not have any worked-out examples on the worksheet. 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 may 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. More information regarding the take-home final will be provided during the course.

Short Quizzes

I may give short in-class quizzes.  There can be different kinds of questions on these quizzes e.g. definitions, short questions and media articles.  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.

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 will be posted on Blackboard after the MFL due dates (see Calendar).

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. 

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

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. Finally, I may change the weight of the different factors on your grade, as I may deem necessary.

Prerequisites:

Students must have satisfied all prerequisites for this course, viz. BUS 046 and MBA 628 and MBA 626 and 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?