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FINANCE 100  Sections 001, 002, and 003

A. Craig MacKinlay                                                                                   Fall 2009

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Extra Office Hour:  John Thomas will hold an office hour on Friday November 20

to answer questions about Assignment 2.  The hour will be from 3 to 4 in the Finance

Department - Desk A.

 

Reminder:  Assignment 2 is due Tuesday, November 24, 2009.

If you are unable to attend class on Tuesday November 24, you can hand in

assignment 2 at the front desk of the Finance Department (2300 SHDH) on

Friday or Monday.

 

Solution for Midterm II is posted in sample exams folder.

 

Syllabus

 

Important Dates:

Midterm Exam I:    Monday, October 12, 2009 - 6:00 pm to 7:30 pm

Midterm Exam II:    Wednesday, November 11, 2009 - 6:00 pm to 8:00 pm

Final Exam:   Wednesday, December 16, 2009 - 3:00 pm to 5:00 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: Tuesday, November 3, 2009

     This cover page must be used when handing in your

      assignment.

 

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: Tuesday, November 24, 2009

    This cover page must be used when handing in your

      assignment.

    Data file:    f100-data-2009.xls

      S&P Technology Sector ETF fact sheet:    igm.pdf

 

 

Handouts:

Interest Rate Exercise (not to be handed in) 

       exercise solutions

Common Stock Valuation

       solution

S&P Report for IBM

S&P Report for GOOG

McKinsey Article on IRR (optional reading)

Practice Capital Budgeting Problem

     solution

Statistics Review (For risk-return analysis)

 

Efficient Market Theory and the Financial Crisis

    This is an article from the WSJ (October 27, 2009) by Jeremy Siegel related to Efficient Markets.

 

Example of Direct Costs of Financial Distress

    

 

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. 

 

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

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

 

Chapter 5 - How to Value Bonds and Stocks - 2, 3, 10, 11, 14, 16,

                            17, 22, 25, 34, 36, and 40.  Note that the

                            textbook bond problems with semi-annual

                            payments give the YTM as an

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

 

Chapter 5 Appendix (linked below) -  Forward Rates  -

                            1, 2, 3, and 4. 

End of material for Midterm I

 

Chapter 6 - Net Present Value and Other Investment Rules -

                            1, 5, 8, 10, 13, 15, 16, 19, and 26.

                            (Optional Problem Set 2 also has problems)

 

Chapter 7 - Making Capital Investment Decisions - 1, 3, 4, 5*,

                             12, 16, 20, 38, and 40a. (*Solution has typo -

                              second last line on page should have the taxable

                              gain multiplied by 0.65 to make it after tax

                               (not 0.35).)

                             (Optional Problem Set 2 also has problems)

 

Chapter 9 - Risk and Return - 1, 2, 7, 13, 17, 22, and 24.

                             (Optional Problem Set 3 also has problems)

 

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

                              31, 32, and 35.

                              (Optional Problem Set 3 also has problems)

End of material for Midterm II

 

Chapter 12 - Risk, Cost of Capital, and Capital Budgeting -

                                1, 5, 10, and 13.

                              (Optional Problem Set 4 also has problems)

 

Chapter 13 - Corporate Financing Decisions and Efficient

                            Capital Markets - concept questions - 5, 9,

                            and 11 - questions and problems - 2 and 3.

                            (Optional Problem Set 5 also has problems)

 

Chapter 15 - Capital Structure: Basic Concepts  - 1, 2, 16,

                            18, and 22.

                            (Optional Problem Set 6 also has problems)

*****

 

Below are suggested problems from the old (7th) edition of the course text. 

 

Chapter 4 - Net Present Value - 4.7, 4.12, 4.15, 4.19, 4.23, 4.26,

                                                      4.30, 4.35, 4.42, 4.46, 4.50, 4.54

 

Chapter 5 - Valuation of Stocks and Bonds - 5.1, 5.4, 5.7, 5.10, 5.13,

                                                   5.18, 5.20, 5.26, 5.29, 5.34, 5A.1, 5A.3

End of material for Midterm I

 

Chapter 6 - Some Alternative Investment Rules - 6.2, 6.3, 6.7, 6.8,

                                                    6.10, 6.13, 6.15, 6.18, 6.19, 6.27

                                                  (Optional Problem Set 2 also has problems)

 

Chapter 7 - NPV and Capital Budgeting - 7.1, 7.6, 7.7, 7.10, 7.11,

                                                    7.21, 7.23, 7.31, 7.36, 7.41

                                                  (Optional Problem Set 2 also has problems)

Chapter 9 - Capital Market Theory - 9.1, 9.2, 9.5, 9.11, 9.17, 9.19

                                                  (Optional Problem Set 3 also has problems)

 

Chapter 10 - Risk and Return - 10.3, 10.4, 10.5, 10.7 (σMAC=8%, σI=20%),

                                                    10.12, 10.19, 10.24, 10.27, 10.29, 10.30,

                                                    10.38, 10.39, 10.40

                                                  (Optional Problem Set 3 also has problems)

End of material for Midterm II

 

Chapter 12 - Risk, Cost of Capital, and Capital Budgeting - 12.1, 12.11, 12.15

                                                  (Optional Problem Set 4 also has problems)

 

Chapter 13 - Efficient Capital Markets - 13.2, 13.6, 13.8, 13.13, 13.20,

                                                    13.21, 13.22, 13.23

                                                  (Optional Problem Set 5 also has problems)

 

Chapter 15 - Capital Structure - Basic Concepts - 15.1, 15.3, 15.6, 15.13,

                                                    15.16

                                                  (Optional Problem Set 6 also has problems)

 

*****

 

Contact Information
 
Office: SHDH 3255 (Finance Suite) Email Professor MacKinlay
 
Teaching Assistants
Britt Danneman danneman@wharton.upenn.edu
Dillon Forrest zforrest@wharton.upenn.edu
  Halley Goodman halleymg@wharton.upenn.edu
Wang Liao wliao@wharton.upenn.edu
Allen Liu liuallen@wharton.upenn.edu
  Yuv Chandra Pathuri ypathuri@wharton.upenn.edu
  John Thomas jvthomas@wharton.upenn.edu

Teaching Assistants' Office Hours

Day                      Time                            TA                       Cubicle

Monday                12 pm – 1pm               Britt Danneman                 B

                             1 pm – 2 pm               Dillon Forrest                    B

                                       3 pm – 4 pm               Yuv Chandra Pathuri         B

                                       5 pm – 6 pm               Wang Liao                        D

 

Tuesday                11 am – 12 pm             Halley Goodman               A

                             12 pm – 1 pm              Allen Liu                           A

                              2 pm – 3pm                John Thomas                    A               

                              3 pm – 4 pm               Wang Liao                        C      

 

Wednesday           12 pm – 1 pm              Britt Danneman                   B

                              1 pm – 2 pm               Dillon Forrest                     B

                              2 pm – 3 pm               Halley Goodman                B      

                      3 pm – 4 pm               Yuv Chandra Pathuri          B      

 

Thursday              12 pm – 1 pm              Allen Liu                             A

                             3 pm – 4 pm                John Thomas                     C

 

 

All Teaching Assistant office hours are held in the TA cubicles located in SH-DH 2300

    to the right of the main desk of the Finance Department.

TA Office Hours Schedule (pdf)

 

 

Corporate Finance (RWJ) Textbook Appendices:

Chapter 4

Chapter 5

Chapter 9

Chapter 10

Chapter 12

Chapter 16

Chapter 17

Chapter 21

 

 

Problem Sets (optional):

Problem Set 1

Problem Set 2

Problem Set 3

Problem Set 4

Problem Set 5

Problem Set 6

 

 

More Problems:

Below are problems with solutions from an early edition of Corporate Finance.

You may find these useful if you want even more problems.


End-of-Chapter Problems and Solutions
Ch. 4 Questions Ch. 4 Solutions
Ch. 5 Questions Ch. 5 Solutions
Ch. 5 Appendix Questions Ch. 5 Appendix Solutions
Ch. 6 Questions Ch. 6 Solutions
Ch. 7 Questions Ch. 7 Solutions
Ch. 9 Questions Ch. 9 Solutions
Ch. 10 Questions Ch. 10 Solutions
Ch. 12 Questions Ch. 12 Solutions
Ch. 13 Questions Ch. 13 Solutions
Ch. 15 Questions Ch. 15 Solutions
Ch. 16 Questions Ch. 16 Solutions
Ch. 16 Appendix Questions Ch. 16 Appendix Solutions
Ch. 17 Questions Ch. 17 Solutions
   
   
   
   
   
   
   
 

 

 

 


 

 

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