FIN 320F Foundations of Finance-Toprac

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FIN 320F Foundations of Finance-Toprac

FIN 320f: Foundations of Finance, Spring 2008

    Unique# 02870: MWF 10:00 11:00, UTC 2.102A

    Unique# 02875: MWF 11:00 12:00, UTC 2.102A

    Section 1. Objective

    Welcome to Foundations of Finance! The purpose of this course is to help you develop a basic understanding of Finance concepts and learn how to apply these concepts in both your work and personal lives. The course is divided into four discrete sections: (1) financial instruments and the markets in which they are traded, (2) financial reporting and analysis, (3) the time-value of money, and (4) the fundamentals of personal finance.

    Section 2. Contact Information

    Professor: Heidi Toprac

    Office: GSB 4.126C

    Office Hours: Mondays and Wednesdays 12:00noon to 1:30pm, and by appointment


    Feel free to drop in unannounced during office hours. Otherwise, email is my preferred method of communication. I keep all graded exams and uncollected homework in my office. To review exams, collect old homework or discuss grades, please contact me, rather than your TA. Bear in mind that UT’s privacy policy prohibits your TAs and I from discussing grade-related information

    via telephone or email.

    TA: Jared Schroeder

    Office: CBA 4.304A

    Office Hours: To be announced


    TA: Adam Williams

    Office: CBA 4.304A

    Office Hours: To be announced


    Your TAs are a wonderful source of help on your homework assignments, end-of-chapter problems, and so on. They can also provide excellent guidance regarding how to use Excel. Section 3. Prerequisites

    To remain registered for this course, you must have successfully completed ACC 310f (or ACC 311 and 312), as well as MIS 311f (or STA 309). Students lacking these prerequisites will be dropped from the course. FIN 320f may not be taken pass/fail if you are seeking the Business Foundations Certificate at graduation. For more information, refer to the Foundations website:

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Section 4. Tools & Materials

    Text: In an attempt to reduce both cost and bulk, we’ll be using a looseleaf, custom text,

    entitled Foundations of Finance - FIN 320F: Customized for The University of Texas rdat Austin, 3rd Edition. It contains several chapters from the 3 edition of Principles

    of Finance, by Scott Besley and Eugene Brigham, plus chapters 9 and 13 from the nd2 edition of the same book. You might want to insert it in a 3-ring-notebook. You

    can obtain it in several ways: First, you can go buy a used copy at Beat the

    Bookstore (located in Dobie Mall). Second, you can buy a new copy directly from

    the publisher. To do so, click on the following link, or cut-and-paste it into your

    browser: . Enter the number 0324345658 in the

    search box on the upper right. That number is the book’s International Standard

    Book Number (ISBN). It costs $71.25 plus shipping. You’ll receive it in 3-4 days. rdYour third option is to buy a used or new copy of the 3 edition of the actual

    hardcover book from or any other bookseller, and borrow chapters 9 ndand 13 of the 2 edition from a classmate.

    Handouts: Periodically, articles from the financial press will be distributed during class, in

    hardcopy form only. These articles are intended to augment your learning experience,

    and help ensure that the course materials are current and relevant. I will print them on

    three-hole-punched paper to facilitate using a 3-ring-notebook. I will place extras in the

    rack that’s hanging on the wall right outside my office door.

    Calculator: Please bring a calculator to class each day. Although any calculator that can handle

    exponents and square roots will suffice, a calculator with financial functions (eg.

    INT, PV, PMT, IRR) can be very helpfulas long as you know how to use it. You

    may not use a cell phone as a calculator during exams.

    Blackboard: Lecture slides, problem sets distributed in class (and their solutions), homework

    assignments (and their solutions), solutions to the end-of-chapter problems, and other

    great stuff will be posted on Blackboard. In addition, please check the

    ―Announcements‖ on Blackboard each week for any changes to the syllabus, updates

    on exam schedules, and so on.

    E-gradebook: All of your gradeshomework, exams, extra creditwill be posted on e-gradebook.

    Scantron data can be automatically uploaded into e-gradebook, making it the

    speediest, most efficient way for you to see your scores.

    Email: From time to time, I may need to email you. The communications policy in the

    General Information Catalog states: "Electronic mail (e-mail), like postal mail, is a

    mechanism for official University communication to students. The University will

    exercise the right to send e-mail communications to all students, and the University

    will expect that e-mail communications will be received and read in a timely

    manner." Enough said.

    Software: All lecture slides will be prepared using PowerPoint. You must use Word to prepare

    Homework 1 and 2. You must use Excel to prepare Homework 3 and 4. As

    mentioned earlier, if you have any concerns about your proficiency with Excel,

    please ask one of your TAs for help.

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Section 5. Grades

    Your final grade in the course will depend on the homework and exam scores recorded in e-gradebook as of 5:00pm on the last class day of the semester. If you suspect an error in grading a particular exam or homework assignment, contact me within 48 hours of the time the grade was posted (or should have been posted). Given the size of this class, if you wait more than 48 hours to address a grading problem, I cannot promise that it will be corrected before I submit your final grade. Final grades will be determined as follows:

    ; The average of your four homework percentage scores will be multiplied by 40%. ; The average of your four highest exam percentage scores will be multiplied by 60%.

    ; The sum of these two scores will determine your final grade.

    Final grades are standards based, rather than norms based, so there is no need for an artificial curve. If you demonstrate mastery of at least 90% of the course material, as calculated above, you will earn an ―A‖. An overall course score of 80-89% will earn a ―B‖; a score of 70-79% will earn a ―C‖; a

    score of 60-69% will earn a ―D‖. A ―D‖ is the lowest passing grade.

    Section 6. Examinations

    The exams in this course are designed to measure how well you have synthesized the concepts learned in class. There will be four in-class examsone for each section of the course. Each will

    be non-comprehensive; that is, each will cover only the material related to that section. In addition, there will be an optional final exam during the final exam period. The final exam will be comprehensive; that is, it will cover material from the entire semester.

    Each exam will have 25 multiple-choice questions. Everything in your text and everything distributed and discussed in class (including handouts, films, and presentations by guest speakers) is subject to examination. Bring your pencils, calculator and picture identification to each exam. There will be a formula sheet attached to each exam, so you need not bring your own. You may not use a cell phone, i-pod, or any other electronic devices during an exam.

    You must take four exams to pass the course. If you miss an exambecause of illness, family

    issues, a funeral, a job interview, a sporting event, etc.the final exam will serve as your make-up

    exam. The comprehensive final exam is the one and only make-up exam. The lowest of your five exam scores will be dropped when computing your final grade. At the end of the semester, if you are satisfied with your first four exam scores and your homework scores, you can skip the final exam.

    Important note: The final exam will be a uniform final; that is, students from both sections will be taking the final exam together. These uniform finals are not scheduled by the Registrar until very late in the semesterusually three weeks before the last class day. The Registrar will use the letter ―u‖ to indicate that it is a uniform final. As soon as the Registrar schedules our uniform final, I will announce the time and date on Blackboard and in class. The Registrar will also report another exam time, and will use the letter ―m‖ to indicate that it is a make-up final. The make-up is only for

    students who have another final exam at the same time as our uniform final. The make-up final is not for students who have already purchased plane tickets, scheduled a job interview, or planned any other sort of event that conflicts with the uniform final exam. I cannot make any exceptions; please don’t ask me.

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Section 7. Homework

    The homework assignments in this class are designed to enable you to apply the concepts you’ve learned in class to authentic, Finance-related events, and then reflect on how these concepts affect you personally.

    There will be four homework assignmentsone for each section of the course. Each assignment is

    worth ten percent of your final grade. Since homework is such an important part of your grade, we don’t want it to be mistakenly counted late, or, worse yet, lost. Luckily, we can use Blackboard as both timekeeper and backup plan. Thus, to obtain credit for your homework, you must submit both an electronic copy and an identical printed copy, as follows: (1) Submit an electronic copy of your completed assignment (in Word or Excel, depending on the assignment) to Blackboard prior to the start of class on the day the assignment is due. (2) Print the file(s) that you submitted to Blackboard and turn in the printed copy at the start of class on the day the assignment is due. Since the paper copy is the printout of a Word or Excel file, it follows that no handwritten homework will be accepted. Ensure that your name, UTEID and unique number are recorded on each page of your homework. Multiple pages must be stapled together. Your TAs and I can’t grade your homework

    unless we receive a hardcopy (since we can’t use UT resources to print it for you). If you can’t

    make it to class, submit your paper copy to the Finance department office, CBA 6.222. If there are any disputes or discrepancies regarding homework submission, the time stamp and data on the electronic copy on Blackboard will prevail.

    You will have at least one week to prepare and submit each homework assignment. Your homework scores will be posted in e-gradebook, and your graded copy will be returned to you during class, on the dates indicated on the syllabus. Thereafter, the solutions will be posted on Blackboard. (Remember the 48-hour rule in Section 5, above.)

    Homework will be considered on-time if it is submitted within the first 15 minutes of class on the due date. Homework is late if it is submitted after the first 15 minutes of class on the due date. Four points (out of 10 possible points) will be deducted from late homework. Thus, the highest score that can be earned by late homework is a ―D.‖ No homework will be accepted after 5:00pm

    on the due date. Please remember that even if you submit an assignment on Blackboard (whether on-time or late), we still need a printed copy in order to grade it.

    Because all homework solutions will be posted online (to enable students to prepare for each exam), there will be no opportunities to ―make up‖ late homework. Let me repeat that: There are no make-

    up opportunities for missed homework assignments.

    From time to time, extra credit opportunities may be announced during class. These opportunities will be available only to those students who attend class on the day(s) of the announcement(s). Section 8. Academic Integrity

    The McCombs School of Business has no tolerance for acts of scholastic dishonesty. If you copy an author’s or website’s words into your homework without appropriate references, it will be

    considered plagiarism. Further, although it is perfectly acceptable to work in groups, you must create and submit your own individual Word and Excel files. Work that is copied will earn a score of zero. Further, the student(s) involved will be subject to other penalties.

    By teaching this course, I have agreed to observe all the faculty responsibilities described in the policy on scholastic dishonesty. By enrolling in this class, you have agreed to observe all the student responsibilities described in the policy on scholastic dishonesty. Students who violate 69294196.doc Page 4 of 7

University rules on scholastic dishonesty are subject to disciplinary penalties, including the

    possibility of failure in the course and/or dismissal from the University. Refer to Student Judicial

    Services at or the General Information Catalog to access the

    official University policies and procedures on scholastic dishonesty as well as further elaboration

    on what constitutes scholastic dishonesty.

    Section 9. Students with Disabilities

    The University of Texas at Austin provides upon request appropriate academic accommodations for

    qualified students with disabilities. For more information, contact the Office of the Dean of

    Students at 471-6259, 471-4641 TTY.

    Section 10. Class Schedule

    Any changes to this schedule will be communicated during class and announced on Blackboard.

    Items in italics are available on Blackboard.

Day Date Class Topic Readings & Problems

    Mon Jan 14 Introduction, Pre-Test & Read the Syllabus


    Wed Jan 16 Introduction to Section I; Read Ch 2; Do Questions 2-1 & 2-2; Self-

    Chapter 2 Part 1: Financial Test Problem ST-1 (a-c, e, g-m, o-p & r only);

    Instruments Problem 2-2; Exam-Type Problem 2-7 (a & b)

    Fri Jan 18 Chapter 2 Part 2: Financial Do Ch 2 Integrative Problem 2-9


    Mon Jan 21 MLK Day: No Class

    Wed Jan 23 Chapter 3: Financial Markets Read Ch 3; Do Questions 3-1, 3-4, 3-6, 3-7,

    3-8 3-9 & 3-10; Self-Test Problem ST-1 (skip

    f); Problems 3-4, 3-5; Integrative Problem 3-9

    (skip g)

    Fri Jan 25 Chapter 4 Part 1: Financial Read Ch 4, pgs 87-102; Do Questions 4-1, 4-

    Market Participants 2, 4-3, 4-5; Self-Test Problem ST-1 (a-d only)

    Hmwk 1 available on Blackboard

    Mon Jan 28 Film: The Stock Exchange thWed Jan 30 Chapter 4 Part 2: Mutual Funds Note: 12 class day

    Fri Feb 1 Chapter 4 Part 3: The Federal Read Ch 4, pgs 106-109; Do Question 4-9,

    Reserve Self-Test Problem ST-1 (h & i only), ST-2;

    Integrative Problem 4-10 Homework 1 Due

    Mon Feb 4 Chapter 5 Part 1: Financial Read Ch 5, pgs 120-124; Do Question 5-1;

    Returns Problem 5-1; Exam-Type Problems 5-5 & 5-6

    Problem Set 1: Chipotle

    Wed Feb 6 Chapter 5 Part 2: Interest Rates Read Ch 5, pgs 127-132 and 139-142; Do

     Questions 5-3 & 5-6; Self Test Problem ST-1

    (c-g) & ST-3; Integrative Problem 5-10 (a-d)

    Fri Feb 8 Review for Exam 1

    Homework 1 Returned

    Sample Exam

    Mon Feb 11 Exam 1 Note: Last day to drop a class

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    Day Date Class Topic Readings & Problems Wed Feb 13 Introduction to Section II; Read Ch 7 pgs 185-195; Do Questions 7-1, 7-

    Ch 7 Part 1: The Balance Sheet 2, 7-3 & 7-9; Self-Test Problem ST-1 (a-d

    Problem Set 1: The Balance Sheet only); Exam-Type Problem 7-12 Fri Feb 15 Ch 7 Part 2: The Income Stmt

    Problem Set 2: The Income Stmt

    Mon Feb 18 Chapter 8: Forecasting Read Ch 8 pgs 228-238; Do Questions 8-1 &

    Problem Set 3: Forecasting 8-9; Self-Test Problem ST-1 (a-d only)

    Hmwk 2 available on Blackboard

    Wed Feb 20 Chapter 7 Part 3: Ratio Analysis Read Ch 7 pgs 196-214, plus Ch 15 pgs 576-

     579; Do Questions 7-4, 7-5, 7-6, 7-7, 7-8 & 7-

    10; Self-Test Problem ST-1 (e-l); Problems 7-

    1, 7-2, 7-5, Integrative Problem 7-14 Fri Feb 22 Chapter 7 Part 4: Add’l Analysis

    Problem Set 4: Analysis

    Mon Feb 25 Chapter 6 Part 1: Business Read Ch 6 pgs 148-168; Do Questions 6-1, 6-

    Organization 3, 6-5, 6-6, 6-7 & 6-8; Self-Test Problem ST-

    1 (a-l only) Homework 2 Due

    Wed Feb 27 Chapter 6 Part 2: Taxes Read Ch 6 pgs 169-178; Do Questions 6-10,

    Problem Set 5: Taxes 6-11, 6-12 & 6-13; Self-Test Problems ST-1

     (m-q only) & ST-2; Problems 6-1, 6-2 & 6-4;

     Exam-Type Problems 6-7, 6-8 & 6-10;

    Integrative Problems 6-11 & 6-12 Fri Feb 29 Review for Exam 2

    Homework 2 Returned

    Sample Exam

    Mon Mar 3 Exam 2

    Wed Mar 5 Introduction to Section III; Read Ch 9 pgs 283-298; Do Self-Test

    Chapter 9 Part 1: Lump Sums Problem ST-2; Problems 9-1, 9-2, 9-3, 9-8 &

    9-9; Exam-Type Problem 9-18 Fri Mar 7 Super Bonus Day: No Class

    Mon Mar 10 Spring Break: No Class

    Wed Mar 12 Spring Break: No Class

    Fri Mar 14 Spring Break: No Class

    Mon Mar 17 Problem Set 1: Lump Sums

    Wed Mar 19 Chapter 9 Part 2: Annuities Read Ch 9 pgs 298-324; Do Self-Test Probs

    ST-1, ST-3 & ST-4 (skip f-h); Problems 9-4,

    9-5, 9-6, 9-7, 9-10, 9-11 & 9-12; Exam-Type

    Problems 9-19, 9-22, 9-24, 9-25 & 9-27;

    Integrative Problem 9-31 (skip l-o) Fri Mar 21 Problem Set 2: Annuities

    Hmwk 3 available on Blackboard

    Mon Mar 24 Problem Set 3: Amortization

    Tables (and tips on using Excel)

    Wed Mar 26 Chapter 13 Part 1: Capital Read Ch 13 pgs 473-488; Do Question 13-5

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    Day Date Class Topic Readings & Problems Fri Mar 28 Problem Set 4: Capital Projects

    Mon Mar 31 Problem Set 5: Lease vs. Buy

    Homework 3 Due

    Wed Apr 2 Chapter 13 Part 2: Other Read Ch 13 pgs 488-501; Do Question 13-2 ;

    Evaluation Methods Self-Test Problems ST-1 (i, k, l, n, o only) &

    Problem Set 6: NPV vs Payback ST-2 (a-c only); Problem 13-1 (a-b only);

    Exam-Type Problems 13-10 & 13-12;

    Integrative Problem 13-19 (skip i-k) Fri Apr 4 Review for Exam 3

    Return Homework 3

    Sample Exam

     Mon Apr 7 Exam 3

    Wed Apr 9 Introduction to Section IV;

    Step 1: Establish Objectives

    Fri Apr 11 Step 2: Deal with risk

    Mon Apr 14 Steps 3 & 4: Select investments

    Hmwk 4 available on Blackboard

    Wed Apr 16 Step 5: Take the plunge Read Ch 16 pgs 617-629; Do Questions 16-3,

    16-4 & 16-5; Self-Test Problem ST-1 (a-h

    only); Integrative Problem 16-15 (a-f only) Fri Apr 18 Problem Set 1: Make choices

    Mon Apr 21 Step 6: Monitor performance Read Ch 16 pgs 630-648; Do Question 16-2,

    16-6, 16-7, 16-8, 16-9, 16-12, 16-13 & 16-14; Homework 4 Due

    Self-Test Problems ST-1 (i, j, k and m) &

    ST-3; Problems 16-1, 16-2, 16-3, 16-4, 16-5

    & 16-8; Exam-Type Problems 16-13, & 16-

    14; Integrative Problem 16-15 (g, h, i only) Wed Apr 23 Guest speaker (date is tentative)

    Fri Apr 25 Problem Set 2: Monitor

    Mon Apr 28 Film: Can You Afford to Retire?

    Wed Apr 30 Review for Exam 4

    Homework 4 Returned

    Sample Exam

    Fri May 2 Exam 4 Note: Last class day (Whoo-hoo!!!)

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