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FINANCE 100  Sections 001, 002, and 003

A. Craig MacKinlay                                                                                   Fall 2012

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Final exams can be picked up at my office (3255 SHDH) on Thursday

January 17th between 1:15 pm and 1:45 pm or between 4:30 pm and 4:45 pm.

Any grade concerns will be addressed after the pick-up date.

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Assignments 1 and 2 can be picked up from the left file cabinet in the

Finance Department (2300 SHDH) across from the TA office.

A check mark on your assignment indicates full credit.

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Syllabus

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Required Textbook Options:

Two options are available for the required course text. One choice is

the 9th edition of Corporate Finance which is the edition that is currently

available. A second choice is the new (10th) edition of Corporate Finance.

This edition is now available in the bookstore. Solutions to the end-of-chapter

problems will be made available online.

 

Important Dates for Fall 2012:

Midterm Exam I:    Wednesday, October 3, 2012 - 6:00 pm to 7:30 pm

Midterm Exam II:    Wednesday, November 7, 2012 - 6:00 pm to 8:00 pm

Final Exam:   Tuesday, December 18, 2012 - 6:00 pm to 8:00 pm


Sample Exams (password required)

 

Assignments:

Assignment 1 - Each student must hand in her/his own solution. 

    However, you are allowed to work with a classmate

     solving this case. 

    Due date: Thursday, November 1, 2012

     This cover page must be used when handing in your

      assignment.

   Assignment 1:    solution

 

 

Assignment 2 - Each student must hand in her/his own solution. 

    However, you are allowed to work with a classmate

     solving this assignment. 

    Due date: Thursday, November 29, 2012

    This cover page must be used when handing in your

      assignment.

    Data file:    f100-data-2012.xls

 

 

 

Teaching Assistants Office Hours

 

Readings:

Term Structure Appendix

Sample Treasury Quotes from WSJ - Bonds and Notes and Bills

Sample US Treasury Quotes from WSJ - Strips 

 

 

Handouts: 

US Government Term Structure

Interest Rate Exercises (not to be handed in)

   Solutions

  

S&P Report for IBM

S&P Report for AMZN

S&P Report for XOM

S&P Report for GOOG

Common Stock Valuation

 

McKinsey Article on IRR (optional reading)

 

Practice Capital Budgeting Problem

   

Historical Return / Risk

Statistics Review (For risk-return analysis)

 

Example of Direct Costs of Financial Distress

Discussion of Indirect Costs of Financial Distress

        

Capital Budgeting Handout (Nov. 29)

 

Suggested Problems: 

Below are suggested problems from the course text.  However, one need

not limit themselves to these problems -- most of the end-of-chapter

problems in the "Questions and Problems" section are appropriate.

 

Problems for 10th edition of text

Chapter 4 - Discounted Cash Flow Valuation - 3, 4, 6, 12, 13, 15, 26,

                            27, 28, 30, 34, 41, 52, 56, 57, and 67.

 

Chapter 8 - Interest Rates and Bond Valuations - 3, 4, 14, 15, 16,

                            17, and 19.  Note that the textbook bond problems

                            with semi-annual payments give the YTM as an

                            annual rate compounded semi-annually (ra,2).

                          

Chapter 9 - Stock Valuation - 1, 9, 13, 14, 15, 22, and 24.

 

End of material for Midterm I

Chapter 5 - Net Present Value and Other Investment Rules -

                            1, 5, 6, 8, 11, 13, 14, 17, 23, and 28.

 

Chapter 6 - Making Capital Investment Decisions - 1, 3, 4, 5,

                             12, 15, 19, 25, and 38a.


Chapter 10 - Risk and Return - 1, 2, 4, 7, 12, 17, and 20.

 

 

Chapter 11 - Return and Risk - 2, 3, 5, 6, 9, 10, 12, 16, 24, 26,

                              30, 31, and 34.

                             

End of material for Midterm II

                           

Chapter 13 - Risk, Cost of Capital, and Capital Budgeting -

                                1, 3, 5, 10, and 12.

 

Chapter 14 - Efficient Capital Markets and Behavioral Challenges

                            - concept questions - 2, 3, 5, 6, 9, and 11

                            - questions and problems - 2, 3, and 4.

Chapter 16 - Capital Structure: Basic Concepts  - 1, 2, 16,

                            18, and 22.

 

Chapter 17 - Capital Structure: Limits to the Use of Debt

                            - 1, 6, and 8.

Chapter 18 - Valuation and Capital Budgeting for the Levered Firm

                                             - 2, 3, 4, 8, and 10.

 

Chapter 19 - Dividends and Other Payouts - 11, 13, 15, and 18.

 

 

Final Exam Material:  The content of class lectures is the most

                                            important material.  Background reading is in

                                            chapters 13, 14, 16, 17, 18, and 19.

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Problems for 9th edition of text

Chapter 4 - Discounted Cash Flow Valuation - 3, 4, 6, 12, 13, 15, 26,

                            27, 28, 30, 34, 41, 52, 56, 57, and 68.

 

Chapter 8 - Interest Rates and Bond Valuations - 2, 3, 13, 14, 15,

                            16, and 18.  Note that the textbook bond problems

                            with semi-annual payments give the YTM as an

                            annual rate compounded semi-annually (ra,2).

                          

Chapter 9 - Stock Valuation - 1, 9, 11, 13, 14, 21, and 23.

 

End of material for Midterm I

Chapter 5 - Net Present Value and Other Investment Rules -

                            1, 5, 6, 8, 11, 13, 14, 17, 23, and 28.

 

Chapter 6 - Making Capital Investment Decisions - 1, 3, 4, 5,

                             12, 15, 19, 25, and 38a.


Chapter 10 - Risk and Return - 1, 2, 4, 7, 12, 17, and 20.

 

 

Chapter 11 - Return and Risk - 2, 3, 5, 6, 10, 11, 13, 17, 25, 27,

                              31, 32, and 35.

                             

End of material for Midterm II

                          

Chapter 13 - Risk, Cost of Capital, and Capital Budgeting -

                                1, 5, 7, 12, and 14.

 

Chapter 14 - Efficient Capital Markets and Behavioral Challenges

                            - concept questions - 2, 3, 5, 6, 9, and 11

                            - questions and problems - 2 and 3.

Chapter 16 - Capital Structure: Basic Concepts  - 1, 2, 16,

                            18, and 22.

 

Chapter 17 - Capital Structure: Limits to the Use of Debt

                            - 1, 6, and 8.

 

Chapter 18 - Valuation and Capital Budgeting for the Levered Firm

                                             - 2, 3, 4, 8, and 10.

 

Chapter 19 - Dividends and Other Payouts - 11, 13, 15, and 18.

 

 

Final Exam Material:  The content of class lectures is the most

                                            important material.  Background reading is in

                                            chapters 13, 14, 16, 17, 18, and 19.

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