REM 052 Syllabus, Fall 2015

REM 052 Course Syllabus Page 1 DISCLAIMER: This syllabus is subject to changes without any prior notification. American University of Science & Technology – Faculty of Business & Economics 2015-2016 © American University of Science &Technology Faculty of Business & Economics Graduate Program REM 052 – Finance Development Skills Course Syllabus Fall 2015 - 2016 Catalog Description This course focuses on the role of the financial manager in the use of financial concepts and techniques in planning for the acquisition and use of funds to maximize the value of the firm. In addition, it covers taxes, discounted cash flow analysis, sources and uses of funds, valuation models, risk and rates of return, financial cash and marketable securities management, credit management, inventory management and short- term financing. Credit: 3 hours | Prerequisites by Course: REM 051 – Accounting Development Skills Main Textbook Fundamentals of Corporate Finance, 2nd Edition Robert Parrino, David Kidwell, & Thomas Bates, John Wiley & Sons Inc. Reference Textbooks 1) Intermediate Financial Management, 9th Edition, for Eugene Brigham & Philip Daves 2) Financial Management, 10th Edition, for G. Keown, John D. Martin, William Petty, and David F. Scott 3) Financial Management, 2nd Edition, for Raymond Brooks Instructor Antoine Aouad, M.Sc | Office Hours: Always Available | Email: anaouad@aust.edu.lb Schedule M 6:30 – 9:00 pm Course Objectives This course provides a sound foundation for understanding key financial issues and maintains a functional focus. The general theme is financial analysis – a broad term that captures the essence of managerial decision-making using various financial techniques, and current thinking on what managers will need to make their business succeed and remain liquid and profitable. The material will revolve around the themes of financial statement analysis, ratio analysis, and role of financial management in enterprises, risk and rate of return, time value of money, and project valuation and evaluation. REM 052 Course Syllabus Page 2 DISCLAIMER: This syllabus is subject to changes without any prior notification. American University of Science & Technology – Faculty of Business & Economics 2015-2016 © Learning Outcomes Students in this course will be able to: 1. Identify the basic forms of business organization. 2. Explain why maximizing the current value of the firm’s stock is the appropriate goal for management. 3. Discuss how agency conflicts affect the goal of maximizing stockholder value. 4. Discuss direct financing and the important role that investment banks play in this process. 5. Describe the primary, secondary, money markets, and capital markets instruments. 6. Compute the nominal and the real rates of interest. 7. Explain how the four major financial statements are related. 8. Identify the difference between average and marginal tax rates. 9. Explain the three perspectives from which financial statements can be viewed. 10. Discuss how financial ratios facilitate financial analysis of a firm’s performance. 11. Explain the concepts of future and present values. 12. Discuss the proper use of present value to make business decisions. 13. Identify the meaning and use of holding period return. 14. Compute the expected return along with the standard deviation of any asset. 15. Define the Capital Asset Pricing Model. 16. Describe the market and types of corporate bonds. 17. Illustrate the calculation of the value of a bond and negative relation between bond prices and interest rate movements. Academic Honesty Submitting someone else’s work as your own is not tolerated. The assignments are designed to fit and may be completed by the individual student. The instructor realizes that homework is frequently a collaborative task, and understands that some students may require some help. Students who collaborate with others are expected to write their homework by themselves in clean A4 sheets. Students are not expected to collaborate on examinations. If the instructor determines that academic dishonesty has occurred, the student(s) involved will normally be given an immediate grade of “F” and dropped from the course. Class Policies Class participation is expected and will form a part of the final grade. Students are expected to attend all class sessions and to be on time. Roll will be called each class meeting. Classes missed for legitimate reasons, such as illness or temporary duty assignments are excusable. The student is expected to make up the missed work by making arrangements with the instructor. The student is responsible for providing the instructor with justification for an excused absence either prior to or immediately after the absence. Absence Policy: 2 absences 1st warning 4 absences Final warning (subjected to an AW) 6 and above Academic Withdrawal  Students who come late to class will not be allowed to attend the session. REM 052 Course Syllabus Page 3 DISCLAIMER: This syllabus is subject to changes without any prior notification. American University of Science & Technology – Faculty of Business & Economics 2015-2016 © Report & Projects All reports and projects should be submitted typed using A4 format papers, Times New Roman font type size 12 with 1.5 line spacing. Projects will also be presented using Microsoft PPT. Course Program No. of Sessions Material Chapter 0.5 The Financial Manager and the Firm 1 0.5 The Financial System and the Level of Interest Rates 2 2 Financial Statements, Cash Flows, and Taxes 3 2 Analyzing Financial Statements 4 1 Exam One 1 to 4 1 The Time Value of Money 5 3 Discounted Cash Flows & Valuation 6 1 Exam Two 1 to 6 2 Risk and Return 7 2 Bond Valuation and the Structure of Interest Rates 8 1 Final Exam Comprehensive Grading The course grade essentially consists of six components. The instructor is at liberty to reassign weights within few percentage points among components if it becomes necessary only if it is in the best interest of the class. All students are required to sit for all exams and group case/project presentations. Failure to attend will result in an automatic F grade. Any such absences must be cleared in advance with the course instructor. Assessment Tool Learning Outcomes Weight Case Studies 1 to 17 15% Take-Home Assignments 6, 7, 8, 10, 11, 12, 13, 14, 15 & 17 10% Exam One 1 to 8 20% Exam Two 1 to 12 20% Final Exam 1 to 17 35% Total 100% Examination Dates Exam Date Material Exam One To be assigned Chapter 1, 2, 3, & 4 Exam Two To be assigned Chapters 1 to 6 Final Exam To be assigned Chapters 1 to 8 Supporting Resources 1. Handouts will uploaded on the online system. 2. Books at the AUST Library Block B, 8th Floor. REM 052 Course Syllabus Page 4 DISCLAIMER: This syllabus is subject to changes without any prior notification. American University of Science & Technology – Faculty of Business & Economics 2015-2016 © Detailed Course Content & Schedule Session Description Chapter Hours Session 1 The Financial Manager and the Firm  The Role of the Financial Manager  Forms of Business Organization  Managing the Financial Function  The Goal of the Firm  Agency Conflicts  The Importance of Ethics in Business Chapter 1 1.5 Session 1 The Financial System and the Level of Interest Rates  The Financial System  Direct Financing  Types of Financial Markets  Market Efficiency  Financial Institutions and Indirect Financing  The Determinants of Interest Rates Levels Chapter 2 1.5 Session2 Session 3 Financial Statements, Cash Flows, and Taxes  Financial Statements and Accounting Principles  The Balance Sheet  Market Value versus Book Value  The Income Statement and the Statement of Retained Earnings (+ BVPS & EPS)  Extra Material: Dividend Payout Ratio versus Retention Ratio  Tying the Financial Statement Together  End-of Chapter Problems Pages 78 & 79 Problems: 18, 22, 23, 25, 28, & 32 Chapter 3 6 Session 4 Session 5 Analyzing Financial Statements  Background for Financial Statements Analysis  Common-size Financial Statements  Financial Ratios & Performance  The Dupont System  Selecting a Benchmark  Extra Material: Basic Earning Power ratio  End-of Chapter Problems Page 78 Problem 19 (Chapter 3) Pages 117, 118, 119 & 120 Problems: 20, 24, 26, 28, 29, 30, 31, 34 & CFA Problems Chapter 4 6 Session 6 Exam One 1 to 4 3 REM 052 Course Syllabus Page 5 DISCLAIMER: This syllabus is subject to changes without any prior notification. American University of Science & Technology – Faculty of Business & Economics 2015-2016 © Session 7 The Time Value of Money  The Time Value of Money  Future Value & Compounding  Present Value & Discounting  Additional Concepts & Applications  End-of Chapter Problems Pages 156, 157, & 158 Problems: 19, 20, 24, 34, 35, & 37 Chapter 5 3 Session 8 Session 9 Discounted Cash Flows & Valuation  Multiple Cash Flows  Level Cash Flows: Annuities & Perpetuities  Cash Flows that Grow at a Constant Rate  The Effective Annual Rate  End-of Chapter Problems Pages 193, 194, 195, & 196 Problems: 19, 21, 23, 27, 29, 31, 35, 36, 38, & 40 + Extra Problems Chapter 6 6 Session 10 Exam Two 1 to 6 N/A Session 11 Session 12 Risk and Return  Risk & Return  Quantitative Measures of Return  The Variance & Standard Deviation as Measures of Risk  Covariance & Correlation Coefficient  Risk & Diversification  Systematic Risk  Compensation for Bearing Systematic Risk  The Capital Asset Pricing Model  End-of Chapter Problems Pages 235, 236, & 237 Problems: 14, 16, 19, 20, 34, 35, & 37 + Extra Problems Chapter 7 6 Session 13 Session 14 Bond Valuation and the Structure of Interest Rates  Corporate Bonds  Bond Valuation  Bond Yields  Interest Rate Risk  The Structure of Interest Rates  Extra Material: YTM & YTC Approximated Formulae  End-of Chapter Problems Pages 264 & 265 Problems: 15, 18, 21, 24, 26, 29, & 31 + Extra Problems Chapter 8 6 Session 15 Final Exam Comprehensive 3 REM 052 Course Syllabus Page 6 DISCLAIMER: This syllabus is subject to changes without any prior notification. American University of Science & Technology – Faculty of Business & Economics 2015-2016 © Note Financial Calculators and Financial Tables are not allowed in this course. Students have to rely on the mathematical formulae in all the chapters. Course Approach The course material will be delivered based on the following techniques: 1. Formal and informal lectures to increase the student participation and effective exposition of discussed issues. 2. Teamwork is also encouraged to continuously apply brainstorming group problem solving techniques. 3. Debate sessions will also be conducted to stress the critical thinking approach into the exposition of ideas and achievement of higher interactivity between students. 4. Online Problem solving sessions through the student’s “wileyPlus” website link. Homework Format All homework should be submitted on the due date. Homework will be graded and returned by next week with the appropriate solution. Late homework will be penalized 50 % per class period. No homework and projects will be accepted after the last day of classes.