0
Finance 3140
PERSONAL FINANCE
Fall 2002
TABLE OF CONTENTS
I.
General Information ............................................................................................................1
II.
Academic Integrity Policies .................................................................................................3
III.
Class Preparation /Projects/Homework ...............................................................................5
IV.
Examination/Grading…..…………………………………………………………………
…9
IV.
Class Schedule…………………………………………………………………………...
10
Reserve Listing ..................................................................................................................12
1
TERM:
Fall 2002
COURSE
NUMBER:
FIN 3140
COURSE
TITLE:
Personal Finance
PREREQUISITES: none
CATALOG DESCRIPTION: Survey of the problems and techniques of personal financial
planning. Includes consumer credit, insurance, taxes, home ownership, personal
investment, managing cash income, controlling expenditures, and estate planning.
Students majoring in financial services or finance may not take this course for credit.
INSTRUCTOR:
Dr. Cheryl Frohlich
OFFICE:
42/3210
OFFICE HOURS:
Tu: 10:30-11:30 Tu Th: 7:15-9:00 and by appointment
PHONE:
620-2630 (office); 223-7249 (home)
CLASS TIME:
Fin 3140 Section 009 Tu Th 3:05-4:20
Bldg. 42/ 2124
REQUIRED:
PERSONAL FINANCE
by Madura.
PERSONAL Planning Workbook
by Madura
Suggested: Financial Calculator (Texas Instrument--BAII Plus)
FEDERAL RESERVE TOUR:
THANKSGIVING HOLIDAY:
DROP DATE:
November 28-30
Thursday, November 7, 2002
LAST DAY OF CLASS: Friday, December 6, 2002
FINAL EXAM:
Fin 3140: Sec. 009: Tuesday, December 10, 3:00-4:50 p.m.
2
WHY TAKE PERSONAL FINANCE?
Ever person must deal with their personal finances. At some point in our lives (usually sooner
than later), we must be able to negotiate a loan (where should we apply for the loan, what will the
lender be looking for in their analysis, and when would be the best time to apply), decide how
much to save and where to place the funds (stocks, bonds, mutual funds), determine what type of
insurance policy you need for your life, disability, health, property/casualty needs, examine the
types of pensions offered when seeking employment, and handle an estate (parents').
Understanding your personal finances is essential for everyone, unless you wish to depend on
another's determination of your needs.
COURSE OBJECTIVE:
The primary overall objective of this course is to broaden all of our horizons with respect to
personal financial issues. More specifically, we will look at those common financial issues that
will impact us throughout our lives. An overview of and the related issues involved in personal
and family financial planning with an emphasis on financial recordkeeping, planning your
spending, tax planning, consumer credit, making buying decisions, purchasing insurance,
selecting investments, and retirement and estate planning will be discussed.
Your tests integrate concepts. They are not homework problems with different numbers.
The student will upon the successful completion of the course be able to understand the
difference between debt and equity securities, understand the types of mutual funds, determine
the best credit terms on loans, calculate a loan's payments, understand the difference in types of
insurance offered, and able to evaluate various pension offers.
TYPE OF FORMAT:
Successful and enjoyable learning in this class begins with class participation. Thus, lecture is
not intended to be the only dominant format in this course. The instructor will provide lectures
and highlight important points in classroom discussion. As this is a topic that many of us have
interesting and instructive experiences, it is important for all to be involved. Guest speakers may
be used, depending on speaker availability and course time constraints. Student suggestions for
potential speakers and topics are encouraged.
I will expect each of you to remain abreast of current developments in financial markets and
financial institutions in general. In order to accomplish this objective, the Wall Street Journal
along with certain weekly publications such as BusinessWeek, Newsweek, or Forbes need to be
read on a regular basis.
WRITTEN COMMUNICATION REQUIREMENT:
Project/Cases--See below
ORAL COMMUNICATION REQUIREMENT:
Oral presentation skills will be demonstrated through class participation.
3
COMPUTER APPLICATIONS:
CD Rom included with Financial Planning Workbook. Some excel usage possible to
calculate retirement issues.
INTERNATIONAL COVERAGE:
None
ENVIRONMENTAL ISSUES COVERED:
None
ETHICAL ISSUES COVERED:
Ethics will be discussed as it pertains to the use of finance in managerial decisions and its impact
upon the organization.
ACADEMIC INTEGRITY POLICIES
ETHICS AND CODE OF CONDUCT
In today's environment, ethics has become an extremely important topic. These characteristics
are not bestowed upon you at graduation but are developed over time. The College of Business
Administration has published an undergraduate handbook which includes a Code of Conduct. All
items listed will be strictly enforced. Any student violating any aspect of the code of conduct will
be penalized and receive a grade of `F' for the course and referred to the proper authorities for
expulsion from the University. Specific items that relate directly to this course are:
Cheating
Intentionally using or attempting to use unauthorized materials, information, notes, study
aids or other devises in any academic exercise. This definition includes unauthorized
communication of information during an academic exercise.
This includes, but is not limited to the following:
(1)
Computer assignments must be done independently.
(2)
Copying or allowing copying by another student or students constitutes cheating.
Multiple Submissions
The submission of substantial portions of the same academic work for credit more than
once without authorization.
(1)
Computer assignments must be done independently.
Abuse of Academic Materials
Intentionally or knowingly destroying, stealing, or making inaccessible library or other
academic resources such as:
(1)
Solution manuals.
(2)
Instructor's overheads.
4
Complicity in Academic Dishonesty
Intentionally or knowingly helping or attempting to help another to commit an act of
academic dishonesty
(1)
Providing answer(s) to a later class.
(2)
Asking other student(s) or class(es) for answer(s).
DISABILITY ACT:
If you have a disability, as defined by the American with Disability Act (ADA), which requires a
classroom accommodation or auxiliary aid(s), please inform me of your needs during the first week
of class so that I may take appropriate action. Individuals who require reasonable accommodations
must contact the Office of Disabled Services Programs at Founders Hall, Building 2, Room 2120,
904-620-2769 as soon as possible.
CLASSROOM PROTOCOL
Success in business requires much more than adequate technical training. Some of the factors
that you should have developed by now include:
(1)
dependability (e.g., attend class regularly)
(2)
punctuality (e.g., class starts on time)
(3)
courtesy (e.g., pay attention, don't pack up early)
(4)
motivation (e.g., be adequately prepared for class)
If you need to leave class early, please notify the instructor and sit towards the back near or
on the end seat of the row.
POLICY ON LATE WITHDRAWALS
The University policy for dropping a course after the last official drop date, is as follows:
UNF students are not allowed to drop a course after the official withdrawal date unless there are
unusual circumstances that are clearly beyond the student's control. When such cases exist, the
student should file a petition with attached documentation. The instructor does not approve or
disapprove, but assigns a grade of WP or WF. The instructor may also recommend an action to
be taken or write a note explaining unusual circumstances connected with the course. This
policy means that students do not have the right to drop a course after the official university
deadline simply because they have a passing grade at that time.
5
CLASS PREPARATION/PROJECTS/LOTUSNOTES/HOMEWORK
Attendance/Participation:
Attendance will be taken and are part of the grade for the course. Students will be called upon at
random in class to discuss in class. If a student is unprepared for the class they will lose points in
the following schedule
Absences
Points
0 -1
20
2
10
3
5
4
0
Unprepared
0 -1
2
3
4
Points
20
15
5
0
Projects:
Two copies of the rough draft of your paper(s) will be due on the first due date. If the rough
drafts are not submitted on the appointed dates (March 6 and March 29 respectively) the student
will lose 10% of the possible points for the paper. The paper(s) will be given to fellow students
to read and critique. The critiqued papers will be due the following class period ( March 8th and
April 3, respectively). If the critiqued papers are not returned on the appointed dates by the
critiquing student-10% of the possible points on the critiquing students paper will be lost.
STOCK-PORTFOLIO:
Due Date: Rough Draft November 5th---Final Paper November 12th
The student has $100,000 (play money (sorry!)) to invest. The student will invest the money
in 3 stocks, 2 bonds, and 3 mutual funds. These investments will occur as follows: The student will
purchase 2 stocks common stocks (one on the New York Exchange and one on the NASDAQ). In
addition, the student will purchase one preferred stock. A Treasury and corporate bond will also be
purchased. Three mutual funds (one stock, one equity and one international) will be purchased. The
prices of the securities will be recorded at least once a week (on the same day). Securities may be
sold after holding the security for two weeks. The entire $100,000 must always be invested
somewhere (even if in a savings account). Accrued interest and declared dividends must be
accounted for in the portfolio. Returns will be calculated on the investments.
It is required that upon completing the stock portfolio-simulation, the student write a two page paper
6
double-spaced on what they learned about the process of investing. As a minimum, the student will
discuss what type of strategies on investing they employed (does not have to be financially sound),
what they observed and learned from trading in the various markets, how they monitored their
portfolio, and any overall observations on the market. A spreadsheet which will list the securities
purchased, the date purchased, the price paid for the security, dividends/ interest paid or accrued, the
date the security was sold, the selling price, the return on the security, and the overall portfolio return
must be included as an attachment.
The paper will be graded upon writing skills (i.e. Introduction, body, conclusion, spelling,
sentence structure, etc.), displaying an understanding of the investment concepts, and
following the directions of the project. The project is not graded upon the performance of
the investment portfolio.
Two copies of the rough draft of your paper will be due on the first due date. If the rough
drafts are not submitted on the appointed dates (November 5th) the student will lose 10% of
the possible points for the paper. The paper will be given to fellow students to read and
critique. The critiqued papers will be due the following class period (November 7th ). If the
critiqued papers are not returned on the appointed date by the critiquing student-10% of the
possible points on the critiquing students paper will be lost.
Economic Indices Paper:
Due Date: Rough Draft Due October 22nd----Final Paper Due October 29th
Current Indices and implications for forecast:
Record the annualized percentage changes on the following economic indices: the real GDP, CPI,
unemployment rate, housing starts, consumer confidence index, consumer credit, business inventory
levels, the balance of trade, and money supply (M-2). These indices are either monthly or quarterly
updated.
You will collect twelve months data prior to the start of the semester (August 2001- August
2002) on those indices that are monthly and eight quarters of data (the second quarter 2000
through 2nd quarter 2002) on those indices that are quarterly. During the semester, you will
collect the current information on these indices.
Current movement of market and interest rates:
Also, collect and record 12 prior months (August 2001- August 2002) of annualized returns on
the market return (use the market index: NYSE.), short-term interest rates (Treasury Bill), and
long-term interest rates (30 year T-Bonds). During the semester, you will collect the current
information on these indices.
It is required that upon completing the indices project, the student write a two page paper doublespaced on the changes in the indices, what they measure, and the implications of the aggregate
changes seen during the collection period. As a minimum, the student will discuss what each index
measures and the implications the changes that occurred in the indices have on the overall economy.
In addition, a summary on the changes seen during the collection period in the indices and the
7
overall forecast for the economy based upon the changes in indices (economy is expanding or
contracting) and the resulting interest rate movement. A spreadsheet which includes the indices
listing their prices or rates and the rate of change on the indices must be included as an attachment.
The paper will be graded upon writing skills (i.e. Introduction, body, conclusion, spelling,
sentence structure, etc.), displayed understanding of the economic concepts, and following
the directions of the project.
Two copies of the rough draft of your paper will be due on the first due date. If the rough
drafts are not submitted on the appointed dates (October 22nd) the student will lose 10% of
the possible points for the paper. The paper will be given to fellow students to read and
critique. The critiqued papers will be due the following class period (October 24th). If the
critiqued papers are not returned on the appointed date by the critiquing student-10% of the
possible points on the critiquing students paper will be lost.
WRITTEN COMMUNICATION REQUIREMENT:
INDIVIDUAL and GROUP CASES
The case method presents real world situations as closely as possible to the manner in which you
would face them. Unlike the usual problems in textbooks, cases may be longer, provide more
information on the financial issue(s) represented, and present many of the uncertainties facing
decision-makers in an actual situation. You will seldom know what the answer is or should be.
Rather, you can only identify what you perceive to be the problem(s), analyze alternative solutions,
and select the approach most appropriate for the particular set of facts in the case. You should
concentrate on the problem but only after a thorough analysis of the facts. Great significance will be
placed on (1) your ability to reach sound decisions that are consistent with your analysis and research
and (2) your ability to communicate your analysis in an effective manner. The case problem must be
stated with a listing of any constraints and a brief background of the case.
Homework/Quizzes:
Homework and attendance are essential parts of the learning process. It is the student's
responsibility to have read the assigned chapter(s) or cases before coming to class. Problems
must be attempted before class or Help Sessions. Assignments should be prepared and are due
on the dates indicated by the instructed. There will usually be a one-week turnaround time on
homework. Late homework will not be accepted. Late is defined as the day I return the
homework in class.
There will be quizzes/homework throughout the semester. Absolutely no makeup quizzes will be
given. If the quiz is announced and you must be out of town, you will need to coordinate taking the
quiz prior to your departure.
Only the highest five homework/quizzes/cases will count towards the final grade.
8
EXAMINATIONS AND GRADING
Examinations:
There will be three hourly tests. The professor leaves an option to dropping a test depending on
how the class progresses. If a test is dropped the percentages will be adjusted accordingly. The
last test may be comprehensive. If you do have to miss a test, clear it with the professor PRIOR
(PRIOR DOES NOT MEAN AN HOUR BEFORE) to the exam. Exams may be taken early
but as a general case NO MAKE-UP's are given. Exams are to remain in control of the
professor. FAILURE TO RETURN AN EXAM RESULTS IN AN AUTOMATIC ZERO
FOR THAT TEST.
FORMULA SHEETS
Formula sheets may be used during quizzes and tests. Only the formula may be written on a
sheet of paper. Examples or directions on how to use the formula cannot be on the sheet. All
Formula sheets must be cleared with the Instructor before the test begins and attached to
the test upon completion.
9
GRADING:
Grading schedule is subject to change given class progress—Notification will be provided prior to
change.
Test 1
Test 2
Final
Participation
Attendance
Portfolio Project*
Interest Project*
Cases
Quizzes/Homework (Top five)
TOTAL
100 points
100 points
100 points
20 points
20 points
20 points
10 points
20 points
60 points
450 points
Two copies of the rough draft of your paper(s) will be due on the first due date. If the rough
drafts are not submitted on the appointed dates as listed above for the respective papers the
student will lose 10% of the possible points for the paper. The paper(s) will be given to fellow
students to read and critique. The critiqued papers will be due the following class period. If the
critiqued papers are not returned on the appointed dates as listed above for the respective papers
by the critiquing student-10% of the possible points on the critiquing students paper will be lost.
A
B
C
D
F
Percentage
90-100%
80-89%
70-79%
60-69%
0-59%
A student must have earned at least 90% of the total possible course points (maximum 100) to
obtain an 'A' for the course. Similar requirements for letter grades, B, C, and D are indicated on
the schedule above. Instructor reserves the right to assign + or -. Although, quite often the final
grades are curved, this is not a certainty. Therefore, the most conservative approach will be to
use the above percentages for grading during the semester.
10
CHAPTER OUTLINE
Chapter 1
Overview of a Financial Plan
Chapter 2
Planning with Personal Financial Statements
Chapter 3
Applying Time Value Concepts
Personal Investing:
Chapter 10
Basics for Investing in Stocks
Chapter 11
Valuation and Analysis of Stocks
Chapter 12
Buying Stocks
Test*
Chapter 13
Investing in Bonds
Chapter 14
Investing in Mutual Funds
Chapter 15
Asset Allocation
Personal Financing:
Chapter 9
Purchasing & Financing a Home
Chapter 8
Personal Loans
Chapter 4
Tax Strategies
Test*
Managing Your Liquidity:
Chapter 5
Banking & Interest Rates
Chapter 6
Managing Your Money
Chapter 7
Managing Your Credit
11
Protecting Your Wealth:
Chapter 16
Auto, Homeowner, & Health
Chapter 17
Life
Chapter 18
Retirement Planning
Chapter 19
Estate Planning
*Test
*Test may be moved depending on progress of class
12
Reserve Listing
Financial Planning Workbook
Personal Finance by Madura